Type: Fixed-rate buy-to-let mortgage
Fixed term: Until June 30, 2023
Fixed rate: 5.99%
Minimum loan: £25,001
Maximum loan: Up to 85% of valuation subject to a maximum of £750,000, up to 80% of valuation subject to a maximum of £1m, up to 70% of valuation subject to a maximum of £1.5m
Income multiples: Rental income must be at least 110% of the mortgage repayments
Arrangement fee: None
Redemption fee: 7% of the mortgage balance in the first eight years, 5% in years nine to 15
Introducer’s fee: 0.90% of original loan
Tel: 0845 601 0763
This deal from The Mortgage Works is a 15-year fixed rate buy-to-let available up to 85 per cent of valuation, with no arrangement fee.
John Charcol product specialist Katie Tucker believes this mortgage could suit the buy to let now, where the rewards are in the long-term equity accrual, not the monthly income. “Now property values are expected to adjust in the short term, buy-to-lets should be treated as a longer-term investment to succeed. This product offers a way to get out of the fee-paying rate tarting cycle, for merely the cost of the valuation and legal costs, as there is no arrangement fee,” she says.
Tucker believes the introducer’s fee is high at 0.9 per cent even for a buy-to-let. “Although when you consider that it removes the client from the potential income for a broker, of remortgaging business for 15 years, it falls short,” she says. She believes that the rental cover required is average in this market.
Turning to the less appealing features of the deal, Tucker says: “The early repayment charges are high. I would prefer to see some sort of redemption window on such a long-term product.”
For Tucker, the main competition would be Lloyds’s term tracker at 0.63 per cent above the Bank of England base rate, giving a payable rate of 5.88 per cent. “This has an arrangement fee of £1,999, but has free valuation and legal fees, 100 per cent rental cover, and very importantly, no early repayment charges.”
Tucker also notes that Royal Bank of Scotland has a 5.5 per cent fix available to 85 per cent of valuation. “The valuation and legal fees are free but you only get the fixed rate for five years for a £1,999 fee, and you have to be earning £75,000 to get 100% rental cover,” she says.
Suitability to market: Good
Competitiveness of rate: Average
Adviser remuneration: Average