Landlords looking to reduce mortgage terms

The data indicated that many BTL customers are increasingly looking to borrow over a shorter period of time, dropping from 62% opting for a 25 year mortgage 12 months ago to 52% in Q4 2014.

In contrast, the percentage of BTL borrowers looking for a loan of 15 to 24 years rose from 29% in Q4 2013 to 41% in the final three months of 2014. The move towards shorter mortgage terms may be a sign of more emphasis on repaying loans during people’s working lives rather than extending them into retirement.

Both BTL borrowers and homebuyers targeted similarly priced properties in Q4 2014 (£229,442 for BTL vs. £231,470 for house purchase). But while the average homebuyer also had a significant amount of equity behind them (£74,159), this is 26% (£25,755) less than the BTL average of £99,914.

As a result of seeking larger loans (£157,311), homebuyers were more interested in stretching their repayments over a longer time period: 80% sought a term of 25 years or more in Q4 2014, compared with 52% of BTL borrowers.

The Q4 2014 data also reveals Monday afternoon (12pm to 5pm) was the most popular time for aspiring homebuyers to search online for a mortgage. In contrast, Wednesday evening (5pm to 10pm) was the most popular time to search for a BTL loan and also attracts the most interest in remortgaging.

Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Some BTL borrowers may see equity gains as a chance to refinance and use some of their extra capital to expand their portfolio. For others – particularly those who are less concerned with growing their foothold in the market – there is plenty to be gained from remortgaging to get a cheaper deal or even bring their final repayment date forwards.”