Mortgage Express has created a flexible buy-to-let mortgage that is fixed at 3.99 per cent until September 3, 2002.
This mortgage is available for loans of up to 80 per cent of valuation and any number of properties can be bought within a total advance of £1m.
After the fixed-rate period, the interest rate tracks at 1.75 per cent above the Bank of England base rate. There is an extended redemption penalty for two years, so borrowers who pay the mortgage off before September 3, 2004 will pay six months' interest as a penalty.
The latest figures from the Land Registry show that landlords are seeing their properties rise in value. The average property price in the UK increased from £105,924 in the second quarter of 2000 to £117,398 in the same period this year.
According to Business Moneyfacts on August 14, 2001, Capital Home Loans has a fixed-rate buy-to-let mortgage which is not flexible and is less competitive. It has a fixed rate of 5.99 per cent until September 1, 2002 and is also available for loans of up to 80 per cent of valuation. Unlike the Mortgage Express deal, it is available to UK expatriates.
Capital Home Loans has a longer extended redemption penalty than Mortgage Express and a higher early redemption penalty. Borrowers who pay the mortgage off before September 1, 2004 pay 5 per cent of the sum repaid as a penalty. This means prospective landlords with a £500,000 mortgage would pay £16,875 as an early redemption penalty with Mortgage Express and £25,000 with Capital Home Loans.