Type: Fixed-rate buy-to-let mortgage
Fixed term: Until July 31, 2010
Fixed rate: 5.75%
Minimum loan: £25,001
Maximum loan: Up to 80% of valuation subject to a maximum of £500,000, loans above £500,000 negotiable
Income multiples: Rental income must be at least 130 per cent of mortgage repayments
Conditions: Capital repayments of up to 10% a year allowed without penalty
Arrangement fee: 1.5%, loans above £500,000 negotiable
Redemption fee: 4% of amount repaid in year one, 3% in year two, 2% in year one
Introducer’s fee: Refer to lender
Tel: 01543 418104
This deal from the Leeds Building Society is a buy-to-let fixed at 5.75 per cent for three years.
Park Row sales director Kevin Paterson thinks the buy-to-let marketplace is becoming increasingly competitive and that this product from Leeds is too conservative to make a dent.
“It’s a good 0.25 per cent off the pace and the arrangement fee is an eye-watering 1.5 per cent. There are many products with this type of fee but they tend to be much more aggressively priced,” he says.
In Paterson’s view the 130 per cent rental calculation is also very conservative, although the lender will also allow income to be taken into account. “There is no higher lending charge but that is a bit misleading because the maximum LTV is 80 per cent – so not much of a giveaway there.”
Summarising the negative aspects of this deal, Paterson highlights the high arrangement fee, the maximum LTV of 80 per cent and the 130 per cent rental calculation.
He believes many products will compete with this deal. “Mortgage Express and BM Solutions probably form the backbone of the competition, with rates of below 5.5 per cent. Many will have lower arrangement fees and rental calculations typically of 120-125 per cent.”
Paterson concludes: “I am not really sure where this product is targeted. It is a very conservatively priced product aimed at purchasers buying a property with no existing tenancy agreements in place, with a 10 per cent over-payment facility. It feels like a niche – and a very small one at that.”
Suitability to market: Average
Competitiveness of rate: Average
Adviser remuneration: Average