The gap between maximum and minimum loan sizes is largest in the specialist BTL sector according to the latest affordability index from Mortgage Broker Tools.

Its research, based on cases processed through its research platform, shows that over 2021 there has been a sizeable difference of £221,173 between the average maximum loan and the average minimum loan size available to buy-to-let investors across the market.

This differential has increased though for HMO properties and holiday let investments. 

The average maximum loan available on an HMO investment so far in 2021 has been £401,384, while the average minimum loan is £164,119 – a difference of £295,636.

For holiday lets, the average maximum loan available so far this year has been £401,384, while the average minimum loan is £164,119. This is a difference of £237,265.

Mortgage Broker Tools CEO Tanya Toumadj says these findings highlight the importance of research, particularly in the BTL market. “Choosing the right lender makes a bigger difference on specialist BTL investments, such as HMOs and holiday lets, which are becoming more popular due to the bigger yields they can deliver.

“This is because of the variety of ways that different lenders will calculate affordability on these types of investments. Some lenders, for example, will calculate affordability based on the property being let on a standard AST, even though in reality, it would have a greater earning potential.

“Criteria is also key for specialist BTL investments as there are many nuances that can impact whether or not a lender is able to lend on a property. So, comprehensive research at the outset is a must for brokers who want to take advantage of this growing opportunity.”