Stroud & Swindon has introduced a buy-to-let mortgage offering a five-year discount on loans of up to 75 per cent of valuation.
The buy-to-let flexible 2006 house purchase mortgage has a 1 per cent discount until July 1, 2006, giving a current payable rate of 6.49 per cent. It allows three properties to be bought within a total advance of £500,000, but the limit for each property is £250,000.
Borrowers can make overpayments and underpayments, take payment holidays and make lump sum withdrawals, but interest is calculated on a monthly basis rather than daily.
According to Business Moneyfacts on August 24, 2001, this mortgage is unique, but it is possible to get a more competitive mortgage of this type that is available for loans up to 80 per cent of valuation. Scarborough Building Society has a flexible buy-to-let mortgage with a 0.64 discount for five years, giving a current payable rate of 6.10 per cent. But it compares unfavourably with the Stroud & Swindon mortgage borrowers who pay off the mortgage must pay one month's interest as a penalty. It also allows only one property to be bought up to a maximum loan of £250,000.
Like the Stroud & Swindon mortgage, interest is calculated on a monthly basis, but the Scarborough mortgage is not as flexible as it allows underpayments, overpayments and payment holidays, but borrowers cannot make lump sum withdrawals.
Some borrowers may prefer the Stroud & Swindon deal despite the higher interest rate because it has no early redemption penalty and the lump sum withdrawal facility could be useful for funding repairs or making mortgage repayments when the properties are empty. Other borrowers may opt for the Scarborough mortgage if they think a low interest rate is worth more than greater flexibility and no redemption tie-in.