Taking out a 10 year fixed rate buy to let mortgage

Paul Martins, consultant mortgage broker looks at options available in the current market and considers the pros and cons of these longer term rates.

Now some of you may recall that we blogged about this topic in early 2015, so you may be curious as to why we are revisiting it. Well, at the time, finance of this type was limited, with only one lender in the buy to let market offering a 10 year fixed rate product! With appetite for longer term fixed rates growing, this has since changed…

There are currently four lenders offering 10 year fixed rate buy to let mortgages although only one accepts limited company applicants.

Borrowing in your personal name…
Rates currently start at:

2.85% (3.8% APR)* to 50% loan to value
>> Get a quote

2.95% (3.8% APR)** to 60% loan to value
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4.49% (4.8% APR)*** to 75% loan to value
>> Get a quote

Borrowing via an SPV limited company…
Rates currently start at:

4.49% (4.8% APR)*** to 75% loan to value
>> Get a quote


As with any rate there are of course pros and cons worth considering...

Pros...

  • No remortgage costs for 10 years
  • Protection from any interest rate rises for the next 10 years

Cons...

  • Redemption penalties if you decide to sell up or redeem the mortgage within the 10 year fixed period
  • The risk of not benefiting from lower payments if interest rates reduce further

If you are interested in any of the rates mentioned above, or are looking to review your buy to let funding options please do get in touch on 01732 471616 or send me an email.

We offer a free review service without obligation, so unless you go ahead with a remortgage you won't pay a penny! What do you have to lose?

Simply download and complete our Property Portfolio Review spreadsheet and return it to us. If you have your own spreadsheet, don't waste time re-entering the details, just send us yours instead.



Product notes:
* Fixed at 2.85% for 10 years (to 31/07/2027) reverting to Lender’s Standard Variable Rate (currently 4.49%, variable). For purchases and remortgages. Early Repayment Charges: 5% of the amount being repaid until 31/07/2019, then 3% until 31/07/2022, then 1% until 31/07/2027 from drawdown. Overall Cost for Comparison: 3.8% APR. Loan to Value: 50% loan to value up to £1,000,000 loan amount. Lender Arrangement Fee: £1,999 added to loan. Broker Fee: A broker fee of £497 will apply (other fee options available). Repayment Options: Interest only or repayment. Rent to Interest Cover: 140% at 5.00%. Minimum Income Requirement: £25,000 per annum.

** Fixed at 2.95% for 10 years (to 31/07/2027) reverting to Lender’s Standard Variable Rate (currently 4.49%, variable). For purchases and remortgages. Early Repayment Charges: 5% of the amount being repaid until 31/07/2019, then 3% until 31/07/2022, then 1% until 31/07/2027 from drawdown. Overall Cost for Comparison: 3.8% APR. Loan to Value: 65% loan to value up to £500,000 loan amount. Lender Arrangement Fee: £1,999 added to loan. Broker Fee: A broker fee of £497 will apply (other fee options available). Repayment Options: Interest only or repayment. Rent to Interest Cover: 140% at 5.00%. Minimum Income Requirement: £25,000 per annum.

*** Fixed at 4.49% for 10 years (to 31/03/2027) reverting to Lender’s InterBank Offered Rate + 4.11% (currently 4.46%, variable). For purchases and remortgages. Early Repayment Charges: 5% of the amount being repaid until 31/03/2020, then 4% until 31/03/2023, then 3% until 31/03/2025, then 2% until 31/03/2026, then 1% until 31/03/2027. Overall Cost for Comparison: 4.8% APR. Loan to Value: 75% loan to value up to £750,000 loan amount. Lender Arrangement Fee: 1.5% added to loan. Broker Fee: A broker fee of £497 will apply (other fee options available). Repayment Options: Interest only or repayment. Rent to Interest Cover: Basic Rate Tax Payer – 125% @ 5.50%, Higher Rate Tax Payer -145% @ 5.50%, Additional Rate Tax Payer - 160% @ 5.50%, Limited Company - 125% @ 5.50%. Minimum Income Requirement: No requirement. 

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