Cheapest Buy To Let Mortgages
Avoid Lender Tricks and Find the Cheapest Buy to Let Mortgages
Deciding on the cheapest buy to let mortgages may not be as simple as it sounds. There are plenty of BTL deals that appear to be the cheapest mortgage, but looking into them further will reveal that they are not as cheap as they seem. The cheapest buy to let mortgages have attention-getting headline rates, but if there is a low rate it is worth considering just how long a low interest rate lasts and what other mortgage features might make that low rate less appealing.
Sometimes there are low fixed rate BTL deals which appear to be the cheapest buy to let mortgages, and it's certainly worth thinking about the advantages of fixing mortgage repayments for a long period. You'll certainly be laughing if the Bank of England base rate rises. However, if it falls, what appeared to be one of the cheapest buy to let mortgages might be a millstone around your neck. You might be forced to repay the mortgage at a higher rate, while other people are getting cheaper deals.
Another factor that will influence a decision about the cheapest buy to let mortgage rates will be how much you need to borrow. Maximum loan to value ratios for buy to let mortgages are lower than for residential mortgages, but with higher lending charges applied over 75 per cent loan to value in some cases, you could find that you need to pay a charge if your lender is offering BTL deals at over 80 per cent loan to value. The addition of this charge could make even the cheapest mortgage seem much less appealing.
BTL Exit Fees
BTL should be looked at as a medium to long term investment, with the average buy to let investor retaining their property for a few years, but what if you want to get out of your BTL mortgage sooner? Exit fees have come under the financial microscope recently, as where these are high they can make the cheapest buy to let mortgages look less appealing. It is also worth looking into the effect of early redemption charges on the cheapest buy to let mortgages.
With most mortgages, there are fees at both ends of the deal, so don't forget to think about how arrangement and administration fees can affect the total cost of the mortgage. Some financial analysts reckon that fees can add a couple of percentage points to what appear to be the cheapest buy to let mortgages.
One good measure of the cheapest mortgage is the overall cost for comparison. This is usually expressed as an annual percentage rate (APR) and gives a truer picture of what the cheapest buy to let mortgages really cost. Bear in mind that if your credit history is flawed, you may not benefit from the typical APR quoted in lenders' illustrations. Many financial comparison sites also reveal how much the mortgage will cost over the time you plan to keep it, expressed as the total amount repayable. This will help you decide on the cheapest buy to let mortgage.
