There's been a lot of uncertainty in the property market of late. Fears of a Brexit-related crash may have proved so far unfounded, but there's still been a shift in where the housing money's going.
Zoopla research from May 2017 discovered that it's now cheaper to rent than to buy in 54% of UK cities.
Of course, from a tenant's point of view, the downside is that they won't benefit from a property's growth in value – but landlords will. The larger base of potential tenants opting to save money by renting represents a great opportunity for landlords to expand their portfolio. But how do you finance a new buy-to-let property? Peer to peer lending could be one solution.
New financing options
There are more ways than ever to get a mortgage, with one option being peer-to-peer lending. It was recently reported that tennis player Andy Murray has invested in the specialist lender Landbay for a second time, establishing peer-to-peer as an option with high-profile support.
Cutting out the middle man
A peer-to-peer mortgage provides an alternative option to the traditional route of approaching a bank or building society for funding. Like crowdfunding, which works by pooling small amounts of cash from a large number of individuals, peer-to-peer matches up borrowers and lenders.
By cutting out the middle man, in this case banks or building societies, borrowers could benefit from lower interest rates – especially if they have a good credit rating. The lenders get a beneficial deal too, earning more interest on their cash than they would if they left it sitting in a savings account.
Flexible interest rates
Applicants for borrowing will have to complete a credit check. This is something that the peer-to-peer platform will carry out and include in its arrangement fees. Those with good credit ratings could be offered interest rates as low as 3%. If your credit rating is not so great, however, rates can rise to as high as 30%.
How to apply
There are plenty of peer-to-peer lending sites out there to choose from: RateSetter, Lending Works and Zopa, to name just a few. When you register, you'll need to state how much you want to borrow and the length of time you want to borrow for. Once you've filled out all your information, you'll get an answer on whether you qualify and what kind of interest rate you'll be looking at.
Just starting out as a landlord and looking for more help and advice? Check out our Complete Guide to Being a Landlord here. Already renting out your buy to let property, or planning to soon? With AXA landlord insurance, we make protecting property simple.
