Cheap Buy To Let Mortgage
Cheap Buy To Let Mortgage | Is That Low Rate Really A Good Deal?
A cheap buy to let mortgage may seem like a good idea for landlords, but how are they to decide whether a cheap buy to let mortgage really is cheap? There are several factors to look at when assessing a cheap buy to let mortgage. Here is a guide to things to look for with a cheap buy to let mortgage.
Many mortgage companies highlight the headline interest rates for cheap mortgage deals. Just as with residential mortgages, lenders may make much of an initially cheap rate. However, it is worth reading the fine print to see just how cheap it really is. For example, a buy to let mortgage with a low initial rate may seem a good deal until you examine just how long that low rate applies. More importantly, with a cheap buy to let mortgage, is what the rate changes to after any initial discount. This will give landlords a better guide to what they will actually pay for their BTL mortgage deal.
BTL Rates
One issue to look at is the overall interest rate, expressed as an annual percentage rate (APR). This gives you a guide to what the true interest rate on a cheap mortgage really is - and it may not look quite as cheap then. However, when sourcing a cheap mortgage landlords also need to think about how long they plan to keep the mortgage and how much they will have to repay in that time. Most landlords retain BTL properties for a few years, though this may not always be true of individual landlords. One measure that might help landlords to assess the cheapest buy to let deals for this purpose is the total amount repayable, which is often quoted on online financial comparison websites.
Many mortgage lenders now charge up front arrangement or product fees for buy to let mortgages and these fees can be quite substantial. These will also determine the really cheap buy to let mortgage products. Landlords can often choose between high fees with low BTL mortgage rates or low fees with high BTL mortgage rates, but may have to hunt around to find mortgages with both fees and rates that appeal.
Some landlords can make their cheap buy to let mortgage even cheaper by choosing an interest only rather than a repayment option. However, this may be a false economy as landlords will not be repaying their BTL mortgage debt. Their equity in the buy to let property will also be less than that of someone who chooses to repay part of the capital during the mortgage term.
Finally, an assessment of cheap buy to let mortgage products will depend on landlords' individual circumstances. It is important to look at these individually before making a final decision. That's why many landlords seek professional advice from brokers on a cheap buy to let mortgage.
