Good news for landlords, as flurry of buy-to-let mortgages enter the market. But how do they compare?
An outbreak of new mortgages and revised deals have hit the buy-to-let market over the last few weeks, which could be great news for landlords and those thinking about investing in property to earn an income.
An outbreak of new mortgages and revised deals have hit the buy-to-let market over the last few weeks, which could be great news for landlords and those thinking about investing in property to earn an income.
Let's take a look at what's been happening.
Coventry goes large
Coventry Building Society has launched a massive six new products for the buy-to-let market. These include four five-year fixed rates (two of which boast no early repayment charges) and two lifetime trackers. All deals are available on a maximum loan-to-value of 75%.
Let's start with the five-year fixed deals. You have the choice of paying a £1,749 fee for access to the best rate of 5.60% or paying a reduced £999 charge which results in a beefier 5.80% price. Fixing for this long can offer peace of mind, but these two deals come with early repayment charges so if you want to switch or sell-up you face a hefty penalty of 3% of the balance up to the end of October 2017, when the deal ends.
Early repayment charges (ERCs) can be a nightmare if you decide to sell your property investment or want to remortgage before the end of your current deal. For savvy investors who want to avoid this pitfall, the two other special 'flexx' five-year fixed rate deals that come with no ERCs could be a better option. The cheaper of the two at 5.75% comes with a hefty £1,749 fee, but for a more appealing £999 you will have to suffer a 5.99% rate instead.
If a five-year fix doesn't appeal then there is a 5.49% (tracking base rate plus 4.99%) lifetime tracker for a fee of £1,749 or one at 5.79% (tracking base rate plus 5.29%) for a smaller fee of £999. Neither of these deals come with ERCs, so if rates rise you can get out penalty free.
The six new deals certainly paint an impressive range but how do they compare?
Well, other similar deals seem to be cheaper.
Skipton Building Society offers a similar five-year fixed with a rate of 5.39% (which is 0.21% cheaper) for a fee of £1,495 and Leeds Building Society has a fee assisted five-year fixed rate at 5.49% (0.11% cheaper) on a 70% LTV. However, both of these alternatives have ERCs, so investors would need to think carefully before signing up.
In terms of lifetime trackers the Coventry deals also appear to be quite expensive compared to others. HSBC has a similar deal that costs just 4.79% (tracking base rate plus 4.29%) for a fee of £499 on a LTV of 75%.That's a massive 0.7% difference and a fee that is over £1,200 cheaper.
Clearly a big range doesn't always mean the best rates so make sure you seek some help on tracking down the right deal through one of our mortgage advisors.
Skipton cuts and extends
In June, Skipton Building Society cut the rates on its buy to let deals by 0.10% and introduced more fixed options.
Now the building society has brought out a double helping of two-year tracker deals to further bolster its range.
The cheaper of the two is 4.34% (tracking base rate plus 3.84%), which you can get if you have a 30% deposit and the other more expensive option of 4.59% (tracking base rate plus 4.09%) is for those with a smaller deposit of 25%.
Both trackers come with fees of £995, which is pretty reasonable considering the average has passed the £1,500 mark - see average mortgage fee passes £1,500 for more. They also have ERCs of 1% of the amount borrowed.
These new deals are competitive when you look at some of the two-year deals out there at the moment. Lloyds TSB and Halifax both have similar two-year trackers but for a rate of 5.19% on a LTV of 75%, which is 0.6% more expensive.
New kid on the block
For those on the hunt for more choice in a narrowing playing field (there are only 411 buy to let products available today compared to 2,265 five years ago according to Moneyfacts), White Knights Finance could be a breath of fresh air on the buy-to-let market.
This new UK property investment lender promises to roll out innovative buy-to-let deals like 90% loan-to-value offers on selected residential properties, 60% LTV offers on commercial property purchases and 85% LTV on freehold ground rent investments. The details of the rates have not yet been disclosed but with a 90% LTV offer this could be an exciting new avenue for investors with a small deposit.
Even more attractive is the simple four stage loan process the company uses to deliver buy-to-let property finance within a short period time. According to the firm this could happen as quickly as within five days. We'll have to wait and see if it lives up to its promises.
Coventry goes large
Coventry Building Society has launched a massive six new products for the buy-to-let market. These include four five-year fixed rates (two of which boast no early repayment charges) and two lifetime trackers. All deals are available on a maximum loan-to-value of 75%.
Let's start with the five-year fixed deals. You have the choice of paying a £1,749 fee for access to the best rate of 5.60% or paying a reduced £999 charge which results in a beefier 5.80% price. Fixing for this long can offer peace of mind, but these two deals come with early repayment charges so if you want to switch or sell-up you face a hefty penalty of 3% of the balance up to the end of October 2017, when the deal ends.
Early repayment charges (ERCs) can be a nightmare if you decide to sell your property investment or want to remortgage before the end of your current deal. For savvy investors who want to avoid this pitfall, the two other special 'flexx' five-year fixed rate deals that come with no ERCs could be a better option. The cheaper of the two at 5.75% comes with a hefty £1,749 fee, but for a more appealing £999 you will have to suffer a 5.99% rate instead.
If a five-year fix doesn't appeal then there is a 5.49% (tracking base rate plus 4.99%) lifetime tracker for a fee of £1,749 or one at 5.79% (tracking base rate plus 5.29%) for a smaller fee of £999. Neither of these deals come with ERCs, so if rates rise you can get out penalty free.
The six new deals certainly paint an impressive range but how do they compare?
Well, other similar deals seem to be cheaper.
Skipton Building Society offers a similar five-year fixed with a rate of 5.39% (which is 0.21% cheaper) for a fee of £1,495 and Leeds Building Society has a fee assisted five-year fixed rate at 5.49% (0.11% cheaper) on a 70% LTV. However, both of these alternatives have ERCs, so investors would need to think carefully before signing up.
In terms of lifetime trackers the Coventry deals also appear to be quite expensive compared to others. HSBC has a similar deal that costs just 4.79% (tracking base rate plus 4.29%) for a fee of £499 on a LTV of 75%.That's a massive 0.7% difference and a fee that is over £1,200 cheaper.
Clearly a big range doesn't always mean the best rates so make sure you seek some help on tracking down the right deal through one of our mortgage advisors.
Skipton cuts and extends
In June, Skipton Building Society cut the rates on its buy to let deals by 0.10% and introduced more fixed options.
Now the building society has brought out a double helping of two-year tracker deals to further bolster its range.
The cheaper of the two is 4.34% (tracking base rate plus 3.84%), which you can get if you have a 30% deposit and the other more expensive option of 4.59% (tracking base rate plus 4.09%) is for those with a smaller deposit of 25%.
Both trackers come with fees of £995, which is pretty reasonable considering the average has passed the £1,500 mark - see average mortgage fee passes £1,500 for more. They also have ERCs of 1% of the amount borrowed.
These new deals are competitive when you look at some of the two-year deals out there at the moment. Lloyds TSB and Halifax both have similar two-year trackers but for a rate of 5.19% on a LTV of 75%, which is 0.6% more expensive.
New kid on the block
For those on the hunt for more choice in a narrowing playing field (there are only 411 buy to let products available today compared to 2,265 five years ago according to Moneyfacts), White Knights Finance could be a breath of fresh air on the buy-to-let market.
This new UK property investment lender promises to roll out innovative buy-to-let deals like 90% loan-to-value offers on selected residential properties, 60% LTV offers on commercial property purchases and 85% LTV on freehold ground rent investments. The details of the rates have not yet been disclosed but with a 90% LTV offer this could be an exciting new avenue for investors with a small deposit.
Even more attractive is the simple four stage loan process the company uses to deliver buy-to-let property finance within a short period time. According to the firm this could happen as quickly as within five days. We'll have to wait and see if it lives up to its promises.
Get advice
High tenant demand coupled with falling house prices in some areas makes a buy-to-let investment sound promising. But this sort of venture is not something to be taken lightly. While there are profits to be made from rental payments and eventually (fingers crossed) the sale of the property, there are also the associated pitfalls of ending up with an empty property with no rent coming in or your property losing value.
Check out how to rent out your home and our guide on how to become a buy-to-let landlord.
For more advice talk to one of our mortgage advisors for some help choosing the right buy-to-let deal for you.
Top buy-to-let mortgages
Here's a round up of some of the best deals on the market, new and old, organised by cheapest first.
Lender | Deal | Rate | Fee | Max LTV |
One-year tracker | 3.29% (tracks base rate + 2.79%) | 3.50% | 75% | |
Lifetime tracker | 3.79% (tracks base rate + 3.29%) | £1,499 | 65% | |
Lifetime tracker | 3.89% (tracks base rate + 3.39%) | £1,999 | 60% | |
One-year tracker | 4.05% (tracks base rate + 3.55%) | 1.50% | 60% | |
Two-year tracker | 4.49% (tracks base rate + 3.99%) | £995 | 60% | |
Three-year fixed | 4.69% | £995 | 70% | |
Three-year fixed | 4.89% | £995 | 60% | |
Two-year discount | 4.99% | £1,400 | 75% | |
Five-year fixed | 4.99% | 3.50% | 50% | |
Two-year fixed | 5.29% | £499 | 75% | |
Five-year fixed | 5.39% | £1,495 | 75% | |
Five-year fixed | 5.49% | £398 | 70% | |
Lifetime tracker | 5.79% (tracks base rate + 5.29%) | £999 | 75% | |
Five-year fixed | 5.80% | £999 | 75% | |
Three-year fixed | 5.99% | £1,498 | 80% |
No comments:
Post a Comment