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Mortgage and Finance : Mortgages Last Updated: May 14th, 2012 - 22:24:01


Best Buy to Let Mortgage Deals

 
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How much can I borrow?

Are you looking for the best buy to let mortgage products with the best rates payable? Itís important to know what you can borrow first and consider the different options available to you.


Most lenders will offer a maximum loan of 85% against the investment property for sale requiring you to fund at least a 15% deposit. Some buy to let mortgage lenders may be in a position to offer more favorable rates if you have a higher deposit available. With the buy to let mortgage industry as hungry for the business as each other it is worth monitoring the market on a regular basis as new products are being launched on an almost daily basis. Always find out the best buy to let mortgage deals available at the time. Some investors may decide to retain their entire investment property portfolio with one lender, but it is important to realize that different products between different lenders can provide you with maximum flexibility and cash flow depending on how you structure your buy to let funding.

What If I donít have a Deposit?

If you are looking to invest in your first buy to let investment property but donít have at least a 15% deposit, then you may find that you could release some equity from your own residential property. Contact your current lender for more details or find out more if you  donít have a deposit and how you can start your buy to let property portfolio.

Once you have established that you are in a good financial position to start on your first buy to let purchase, then you will need to know what options are available to you. Spend some time using some of the
FREE buy to let mortgage quote systems and see how different buy to let mortgage products compare.


Buy to Let Mortgage Types

Variable rate buy to let mortgages

This is the lender's own mortgage rate and one that is subject to change whenever the lender chooses which is at the same time of base rate changes. This means that if you are on a lenders standard variable rate buy to let mortgage product then your monthly repayments will increase or decrease accordingly although they very rarely pass on the full percentage reduction to the client. This type of product does also allow the lender to change the rate even if there is no change in the Bank of England base rate. So if you are looking for something a bit more palatable why not look at your other options.

Discount buy to let mortgages

For a set period, the lender offers a reduction on its SVR (standard variable rate). Letís say, it might offer a discount of 1.5 per cent over three years. However much the SVR (standard variable rate) increases or decreases during the discount period, you always pay a rate 1.5 per cent lower.

Stepped Discount buy to let mortgages

Its also worth considering stepped discount buy to let mortgages, where the level of the discount reduces after a set period. For example, you may be offered a 1.5 per cent discount for a year, followed by a 0.75% per cent discount for the second year.

Fixed-rate buy to let mortgages

Regardless of the (SVR) standard variable or changes in the base rate, this kind of buy to let mortgage offers a fixed interest rate for a set period. The monthly mortgage repayments will remain the same giving the property investor the knowledge of what their monthly outgoings will be for a set term.

Capped-rate buy to let mortgages

The capped-rate buy to let mortgage offers a limit as to how high the interest rate can go. The rate you pay can move up and down below that level but never go beyond it. Your payments would reduce if there were any base rate decreases.

Drop-lock buy to let mortgages

This is a feature that is included in some buy to let discounted mortgages. Initially you decide to opt for a discounted product but for a small fee you have the option to drop into one of that lenderís fixed rate products. At which time you would then be bound by the terms of the new fixed rate product.

Tracker buy to let mortgages


Tracker products can be a good option for buy to let investors. Tracker products offer a margin over the base rate for certain periods of time. Some will offer a buy to let tracker product which tracks the base rate plus a margin for a few years whereas recently there are more products coming on the market where they will track the base rate for the life of the loan. Providing it is a low enough margin over the base rate and the base rate remains at a comfortable level, this can be particularly cost effective to a buy to let landlord as it can avoid the necessity for regular refinancing and the costs involved in the exercise.

 

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