Buy to Let Mortgages

What is a Buy to Let Mortgage?

Simply put, it's a mortgage loan on a property that you don't live in. So it's probably an investment you have made or you have moved overseas and are currently renting your home out to tenant but still have a need for mortgages upon it. These days the buy to let market is more specialised although many main stream lenders will still entertain loans in this market the rates and fees have shot up.

Buy to Let Rates and Fees

Most landlords have let their mortgage deals lapse onto standard variable rates because that is so much cheaper than any new deal that can be got on the open market place. If you look at the best buy tables for a buy to let mortgage you'll see that not only are the initial rates perhaps double what a standard home owner would be paying but the application and arrangement fees are two or three times as high as well.

Add on the top of this that the loan to value percentages are now between 60% and 75% and you might find it difficult to get a loan today. However all is not lost as there are some standard banks and building societies that do have good rates as well as specialist brokers and other professional organisations that can help you reduce your costs.

Best Buy Tables

Going onto the standard mortgage comparison sites will unlikely find you the best deal although they may be a good place to start your search. Specialist brokers may find you a good rate but the fees may be extremely high. Here are some examples:

• The Mortgage Works - initial rate BOE base rate + 2.49% for one year then standard variable rate for the term. Arrangement fees are 3.5% of the loan value and there are early redemption penalties of 3% for the first year.
• Principality Building Society - initial rate BOE base rate + 2.79% for the first two years then standard variable rate. The lender's arrangement fee for this mortgage is 3.5% of the loan value with early redemption penalties of 4% in the first two years.

The maximum loan to value for both of the above is 60%.

Finding the Better Deals

If you're looking for a loan to value mortgage of 60% or less then there are more options if you search online. The cheapest we found were with the Leeds Building Society and the Coventry for three and five year fixed rates at competitive prices as well as low arrangement fees (around £1,000 which is on a par with most domestic mortgages).

It may take a while to get the best rate (look at all the options from fixed rates as well as discounted rates) and to lower the fees. Once you have a few options from searching online then it's well worth a telephone call to the lender to see if they have any better deals or can reduce the amount of fees they want to charge you.

If you need a loan over 60% then your options will be limited and you won't get the best rates and fees will be much higher. In fact we couldn't find any products that offered buy to let mortgages with a loan to value of less than 70% so if you are thinking of becoming a landlord you will likely need at least 30% of the value of the property as a deposit and then hunt down the best deals.