Foreign lenders offer buy-to-let finance in UK

Foreign mortgage lenders are stepping into the breach in the UK and now providing more buy-to-let finance than ever before.

It was feared that severe restrictions on the range of mortgages would hit the buy-to-let property market badly but new research shows the market has continued to thrive, despite the ongoing liquidity crisis.

The research from mortgage planner HFM Columbus, has found that £1 million plus worth of buy-to-let finance has all but disappeared in the UK but German, Swiss and even Israeli banks are stepping in, especially at the top end of the market.

Included in the new influx of lenders are Sweden's Handlesbanken bank, Germany's Kleinwort Benson, Israel's Bank Leumi and Switzerland's EFG Bank.

'Our own lenders have effectively pulled the plug on the top end of the market altogether,' said HFM Columbus mortgage specialist Gary Festa.

'Current market conditions have given rise to tremendous buying opportunities, and now we have a situation where foreign investment banks are swooping,' he added.

A recent example cited by HFM is Handelsbanken, which offered a client up to £2 million at 1.4% above bank base, initially for three years when the rate would be reviewed.

The bank is also prepared to offer an offset facility alongside this loan but no UK lender wanted to touch anything above £1 million, finds HFM.

'The best we could find via traditional UK lenders is 1.6% over Bank of England base rate and it is just not competitive,' added Mr Festa.

HFM points out nearly all of the traditional lenders' schemes on buy-to-lets of up to £1 million have early redemption tie-ins of between two and three years, whereas foreign owned banks tend to have none.

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