Mortgage Next has joined forces with Mortgage Express to offer a buy to let five-year fixed rate mortgage.
The mortgage is available for loans of up to 80 per cent of valuation and is fixed at 6.35 per cent until June 3, 2006. An unlimited number of properties can be bought, within a total advance of £1m.If borrowers redeem in the first five years, they must pay a redemption penalty of six months interest.
According to Moneyfacts on May 11, 2001, the Royal Bank of Scotland's five-year fixed-rate buy to let has a more competitive interest rate at 6.19 per cent until July 1, 2006. Like Mortgage Next, it is available for loans of up to 80 per cent of valuation and also has redemption penalties in the first five years.
Borrowers who choose to redeem early must pay five per cent of the advance in year one, reducing by one per cent each year to one per cent in year five. This means borrowers who redeem in year one would pay less with Mortgage Next, but those who redeem in year five would pay less with the Royal Bank of Scotland.
However, the Royal Bank of Scotland allows just two properties to be bought within limits within the total advance. Mortgage Next is more competitive because the number of properties are unlimited and this means there is less risk of all the properties in the portfolio being empty at the same time.