Compare Buy To Let Mortgage
How To Compare Buy To Let Mortgage Deals For Extra Profit
As a landlord, you need to compare buy to let mortgage lenders' deals to be sure that you are getting the deal that is the best for your circumstances. But trying to compare buy to let mortgage products can be a minefield. Here are ten areas that you should look at in any BTL mortgage comparison.
One key issue when you compare buy to let mortgage products is the loan to value. With buy to let, this usually ranges from 50 per cent to 75 per cent. Loan to value also has an effect on the second factor, which is the interest rate. When lenders compare buy to let mortgage deals, they make much of the interest rate, particularly if it starts out low. But if there's a good interest rate at 65 per cent loan to value, that doesn't mean the same rate will apply at 75 per cent loan to value.
Fees are also an important consideration when you compare best buy to let offerings, especially if you are considering a purchase. There will usually be valuation fees to be added to the cost of the BTL mortgage deal. These may be on a sliding scale according to the property value or may be fixed. There are also arrangement fees and some of these can be quite steep. Many lenders offer a trade off between high product fees and low interest rates or higher interest rates and reduced product fees. With a BTL remortgage comparison, this issue may be easier, as legal and valuation fees are often free with remortgages.
Linked to the interest rate is another important consideration when landlords come to compare buy to let mortgage products. That is the type of interest rate. BTL mortgages offer fixed, variable, capped, tracker and discounted rates and any combination of all five. When landlords compare buy to let mortgage deals, it is important to establish which type of interest rate is the best for their circumstances. In addition, it is important to look at how the loan is to be repaid, a fifth important factor. There is usually the choice of capital repayment, interest only or mixed repayment. Interest only offers the lowest repayments but retains the largest debt.
BTL Mortgage Fees
Two more important factors for those seeking to compare buy to let mortgage options are the mortgage term and any fees that might be charged for ending the mortgage early. BTL mortgages are usually for a standard term, but a landlord's age will significantly affect the term of the mortgage loan. In addition, selling on the property to realise the investment could mean having to pay early redemption charges. These can be quite steep, especially during a preferential rate period.
When landlords compare buy to let mortgage deals, they should also make sure that they know what kind of property the lender will lend on. There is no point in approaching a certain lender for a BTL loan on a flat, when the lending criteria prohibit this type of dwelling. It is also worth considering whether there are any compulsory insurance products to be taken out.
The tenth and final factor in a BTL mortgage comparison is also one of the most important. It is how lenders calculate rental income. Along with income, this is a key criterion for determining how much a landlord will be allowed to borrow to fund a BTL purchase. This can be a minefield, which is why many landlords choose to use a broker to compare buy to let mortgage deals.
