- North Easterners gloomiest about house prices
- Scottish house prices resilient in face of tax disruption
- UK landlords warned that incomplete inventories costing Britain’s tenants dearly
- Number of UK property millionaires tops 1/2 million
- Landlords could start to raise rents after budget cut to their tax benefits
- Buy to let tax break removed for wealthy landlords, housing shares fall!
Buy to let mortgage deals you need to see!
If you want to rent out a property as a landlord, you need a buy-to-let mortgage
Typically landlords need higher deposits than normal buyers and will pay higher mortgage rates too. Affordability is calculated not on the borrower’s income, but how much rental income the property can achieve. This is known as rental cover.
Like mainstream mortgages, buy-to-let mortgages can be fixed mortgages of various lengths, or variable rate mortgages.
Two-year fixed rate mortgages are the cheapest, but some tracker mortgages give them a run for their money.
If you want the added security of a five-year fixed rate, you’ll pay a premium in the form of a higher interest rate. Long-term fixed rates also come with much higher Early Repayment Charges, so you might need to take that into account too.
Top two-year fixed rate buy-to-let mortgages
First, let’s look at the two-year fixed rate mortgages. These are the lowest rates around but you’ll pay the price for a cheap rate in the form of a big fee.
Most buy-to-let mortgages have a fee that’s a percentage of the mortgage amount so the tables below show the fee for a mortgage of £150,000.
You’ll need at least a 15% deposit to get a buy-to-let mortgage.
|Lender||LTV||Interest rate||Mortgage fee|
As you can see, there are some massive fees there. But what if you don’t want to stump up a significant product fee? These are the best mortgages with fees under £700, again looking at a £150,000 mortgage.
|Skipton Building Society||70%||3.45%||£286|
Five-year fixed rate buy-to-let mortgages
If you want to go for a longer-term fixed rate deal, then you may prefer a five-year fixed rate deal. While you enjoy that security for longer, you may have to pay a premium in terms of a higher rate. You also have significant Early Repayment Charges to consider should you wish to leave the deal early.
Again the fees are calculated on a mortgage amount of £150,000.
|Santander for Intermediaries||60%||3.29%||£4,115|
And now let’s take a look at the best deals with a fee of under £700.
|Skipton Building Society||70%||4.29%||£286|
Tracker buy-to-let mortgages
With a tracker mortgage your monthly repayments may go up or down, usually depending on what’s happening with the Bank of England Base Rate. However some lenders track other rates – often their own “base rate” or another variable rate such as LIBOR.
At the moment, there are some really great rates on offer. However don’t be too swayed by the rate you see now – could you still afford the mortgage if interest rates rose by a couple of percentage points?
Most trackers are for two years but there a handful of products available for the entire term of the mortgage.
|Virgin Money||70%||2.29% (BoE +1.79%)||£4,124|
|Mortgage Trust||80%||3.65% (LIBOR+3.05%)||£2,945|
The best deals are listed below and are all at the lender’s standard variable rate (SVR) – be aware it can alter this at any time.
|Godiva||65%||2.89% SVR for term||£2,249|
|Aldermore||70%||3.93% SVR for term||£4,930|
|Aldermore||80%||4.98% SVR for term||£2,429|
Again, some of the fees on these deals are huge so here are some low-fee trackers.
|NatWest||60%||3.14% (NBBR+2.64% for 2 years)||£271|
|Leeds Building Society||70%||5.99% (SVR for term)||£405|
|NatWest||75%||3.79% (NBBR+3.29% for 2 years)||£271|
|Ecology Building Society||80%||5.75% (SVR for term)||£600|