Are there any 10-year fixed rate buy-to-let mortgages? The adviser I saw recently recommended two-year products and was dismissive of anything longer term. I don’t want the hassle of remortgaging every two years and I read in What Mortgage that there were more 10-year mortgages on the market now but the article seemed to be talking about residential mortgages rather than buy-to-let.
Although remortgaging can be a hassle, it can save borrowers thousands of pounds which, for many landlords, is an integral part of their investment strategy. However, if that’s not your focus there is currently only one 10-year fixed rate buy to let mortgage on the market. It was launched in January this year by The Mortgage Works. Available up to 75% loan to value, the rate is fixed at 4.99% (5.04% APR) for 10 years and is available for purchases, remortgages and those looking to let to buy. The lender arrangement fee is a flat £995 added to the loan and the rent to interest calculation is 125% at 4.99%.
Fixing for 10 years, however, is a big commitment and if you later decide you want to redeem the mortgage before the 10 years is up, you will incur Early Repayment Charges - 7% of the amount being repaid for the first four years, then decreasing by 1% increments yearly until the end of the initial term. Not small amounts, although 10% over-payments are allowed each year without penalty and I would expect many to take advantage of this concession.
You could also consider fixing for five years which is what many investors prefer. There are a growing number of these products available, at currently very competitive prices, and we at Mortgages for Business have long been advocates of these products because they provide borrowers with some protection against future rate rises – who know when Bank Rate will start to go up? The 10-year rate is only available via intermediaries, so if you are interested in it and talking further about the benefits of fixing for longer than 2-3 years, do get in touch.
>> The pros and cons of taking a 10 year fixed rate buy to let mortgage