Fixed Rate Buy to Let Mortgage
Fixed Rate Buy To Let Mortgage| Advantages And Disadvantages
There are plenty of fixed rate buy to let mortgage deals available and these offer several advantages for buy to let landlords. Some buy to let landlords prefer the security of a fixed rate buy to let mortgage. This is because a fixed rate mortgage allows them to fix their payments for a certain period and to know exactly what they will have to pay. This can be a great advantage to a landlord who wants to know exactly what the monthly outgoings will be. Landlords who wish to reduce their monthly outgoings in the early stages of a mortgage can opt for a fixed rate mortgage deal with an initial discount. The discount can last for a few months or a couple of years, before reverting to another rate.
However, a fixed rate buy to let mortgage also has some disadvantages. While a fixed rate mortgage protects landlords against interest rate rises, it also means that if interest rates fall, landlords are stuck with paying the higher rate. And it is not always convenient to move mortgages, as there are usually early redemption penalties during the early period of a fixed rate buy to let mortgage. In order to decide whether a fixed rate buy to let mortgage is right, it is best to consider whether your main aim is keeping your payments secure or whether you would prefer to live with a little risk. In the latter case, a tracker rate mortgage might be a sensible option.
BTL Fixed Rate Deals
If you do decide on a fixed rate mortgage it may well be worth ensuring that the mortgage deal is portable so that you can move the mortgage from one property to another without and redemption penalties having to be paid.
A disadvantage of sometimes opting for a fixed rate buy to let mortgage, especially a very low fixed rate is that when your deal comes to an end and you are looking to possibly refinance the deal with another lender is the following: If you opted for a low fixed rate because the rental calculation was satisfactory at this level, then what if in 2 years time the rates move higher and you find that suddenly you cannot re finance to another fixed rate mortgage as the rental calculation does not fit anymore? In this scenario you will be forced to stay with your current lender and if all they can offer you is their standard variable rate you may be in for one huge payment shock! It has happened before and we have seen this type of scenario played out on numerous occasions in 2008 when new clients have asked us to look into their refinancing.
Is a fixed rate buy to let mortgage best suited to you? Well this depends on your particular circumstances and as long as you are aware of the disadvantages as well of the advantages then we can help you make an informed decision. Sometimes fixed rate buy to let mortgage rates will be cheaper then tracker or discounted deals and at other times they will be more expensive. Contact us now to find out what is available in the current market place.
