BTL finance is key
We are just a couple of weeks into 2014, so I thought I’d take a look at some of the best deals currently available courtesy of Property Hawk Mortgages free BTL mortgage search tool.
Fixed rate environment
We are currently in a wonderful low interest rate environment. Having just calculated my rental profits for the last tax year I’m all too aware of how great this is, but remember it can’t, and won’t last.
So the question is, should you lock into these historically low interest rates now?
A few months ago most projections were that interest rates would remain low for several years. This was after the Bank of England Governor, Mark Carney, set a 7% threshold for unemployment before he’d consider any reduction of rates.
However, a sudden and dramatic fall in unemployment, has left us all on tenterhooks. Will Carney act if the rate is crossed, or will he even reset the target rate to for unemployment to a lower figure? The general consensus amongst financial observers is that rates will not rise this year.
But the truth is, nobody can be sure. So for those landlords who need security, it might be worth locking into some low fixed rates, or certainly utilizing them for new purchases. With this in mind here are some details of some good low cost fixed rate mortgages.
Best fixed rates
The Mortgage Works is a low cost fixed rate at 2.99%. This rate is fixed until the end of April 2016. There is a 2.5% completion fee so you will pay for the certainty of constant repayments and the advance is available up to 75% of the value of the property (LTV).
For those landlords that are looking at locking in a low rate for a number of years, the best long-term fix rate is with Accord. This rate remains fixed until 28/02/19. Again it’s a max 75% LTV and comes with a 2.5% completion fee. We are keen for our users to get the best deal so always check a mortgage products APR to find out the true long-term costs of a mortgage.
Not sure of rates?
Predicting future interest rates in this environment is very difficult / impossible. My poor girlfriend is stuck on a five year fixed rate mortgage paying over 5.99% with no economic way out until it comes to an end in 2016. At the time it seemed like a good deal.
If you don’t feel ready to guess the market, a product with a low set up costs might be a solution. This prevents getting tied in by huge fees, and will leave you free to ‘duck and dive’ and remortgage in a few years when your view is clearer.
Principality BS are offering a discounted mortgage product with a pay rate of 3.19% discounted until 31/03/2016 with a completion fee of £900 (75% LTV). FREE valuation for purchases and remortgages and FREE legal’s for remortgages help to keep set up costs low.
For those landlords who are particularly keen not to part with their cash, the Hanley Economic BS is even offering a mortgage with no completion fee (80% LTV). The 2 year discounted rate of 4.95% is less attractive than some others but then there is a free valuation for properties up to £250,000.
Landlords looking to build a portfolio in 2014
The decision on how big you want to grow as a landlord is a personal one. For some landlords their portfolios can’t ever be large enough, so for those who are wanting to expand rapidly there are two mortgage products that are real portfolio builders.
Sharbrook Bank will consider financing a portfolio purchase on a single mortgage. Current rates on this mortgage are 5.7% for a 3 year tracker with a completion fee of 1.7% and a maximum Loan To Value of 75%. The Kent Reliance has no maximum aggregate value on its’ loan and will consider multiple loans on separate mortgages. The details of this product are: 4.89% 2 year discount with a maximum LTV of 85% and no Early Repayment Charges (ERC).
Buying a property at auction
It’s always possible to pick a bargain at a property auction. With auction finance speed is essential. Once the hammer goes down and you have paid your 10% deposit you often only have 28 days to come up with the cash. The secret is to find a lender who can give you a quick Decision In Principle (DIP). BM Solutions is known in the industry for offering a quick turn around time. The other alternative is to go for a bridging loan.
Whatever your plans for expansion are for 2014, sign up for Property Hawk Mortgages for regular updates on the latest BTL deals.