Skipton Building Society is giving potential landlords a helping hand with the introduction of the residential buy-to-let mortgage.
The mortgage is aimed at people looking to buy a property and then rent it out to others, providing themselves with an income from the rent. It will have a discount of 0.3 per cent for the first year of the mortgage for loans of up to 80 per cent of valuation. This gives it a payable rate of 6.6 per cent.
It comes with a completion fee of £125, while the redemption penalty is the remaining monthly interest that would have been payable at the end of the month that the mortgage is paid off. A maximum of three properties can be bought, totalling £1m.
The buy-to-let market is continuing to grow, with companies such as Paragon Mortgages withdrawing from the retail mortgage sector to concentrate on the buy-to-let market. According to a recent report from the Association of Residential Letting Agents the average value of buy to let properties all over the country rose by 8.4 per cent from December 2000 to May 2001, with the highest values being in the South East of England, where the average value is £168,000.
According to Business Moneyfacts the most competitive one-year discount buy-to-let mortgage is from Britannic Money. This has a discount of 1 per cent for loans of up to 80 per cent of valuation, giving it a payable rate of 5.64 per cent. It has no redemption penalties. Unlike the Skipton product, the Britannic Money mortgage can be used to buy any number of properties up to a maximum value of £1m.