Pink Home Loans has introduced a four-year fixed rate buy-to-let mortgage that is available for loans of up to 85 per cent of valuation.
The mortgage is fixed at 6.99 per cent until September 30, 2005 and allows up to five properties to be purchased within a total advance of £500,000. If borrowers redeem the mortgage during the fixed-rate period, they must pay a penalty of 6 per cent in year one, 5 per cent in years two and three and 4 per cent in year four.
According to Business Moneyfacts on August 8, 2001, this is the only four-year fixed rate buy-to-let mortgage of its type. However, borrowers can get a more competitive fixed rate for five years with Bristol & West. It offers a fixed rate of 6.55 per cent until October 31, 2006 for loans of up to 85 per cent of valuation.
Like Pink Home Loans, this mortgage allows a maximum of five properties to be bought within a total advance of £500,000 and borrowers who redeem the mortgage during the fixed rate period must pay a penalty. This amounts to 7 per cent of the sum repaid in year one, 6 per cent in years two and three and 5 per cent in years four and five.
Some borrowers may prefer Bristol & West because it offers a more competitive rate for one year longer than Pink Home Loans. However, other borrowers may prefer Pink Home Loans because the early redemption penalty is lower during the fixed rate period.