The Client: An experienced landlord and property developer. We had reminded her that one of her buy to let mortgages was nearing the end of its fixed rate period. Simply leaving it in place would mean an increase in monthly mortgage payments when the lender’s Standard Variable Rate kicked in. We asked her if she would like us to find her a better rate.
The Property: A regular 3-bed terraced house let to a family on an Assured Shorthold Tenancy agreement in south west London.
The Finance: Looking at the client’s circumstances, we told her that she had a couple of options; either to transfer to another product with her current lender, or remortgage with a new one. Both options would save her money.
Rather than be bothered with a fresh mortgage application, the client chose the product transfer route because she wasn’t looking to raise any capital and it is a much quicker and cheaper process; there is no underwriting, no new affordability assessment, no need for a valuation* and no legal fees.
The Application Process: As an existing customer, we already held much of the client’s details securely on file including a copy of the original mortgage offer. We were able to use these details to organise the product transfer straight away. The very next day, the lender produced a new mortgage offer. The completion date was set to coincide with the expiry of the existing mortgage ensuring a seamless transition from the old product to the new one.
The new mortgage rate will save the client £30,400 over the next five years; that’s £6,080 per year or £507 per month – all because she agreed to let us review her existing mortgage arrangements instead of doing nothing (and thus reverting onto the lender’s SVR).
The new five year fixed rate will also provide financial certainty on her mortgage payments in a post-Brexit world. Here are the details:
Property value: £525,000
Loan amount: £304,000
Rate: 3.09% 5 year fixed
Term: 20 years interest only
Lender arrangement fee: £999 added to loan
Mortgage payment: £782 pcm
Rental income: £2,266 pcm
Gross yield: 5.2% pa
Consultant: Nick Helm, 01732 471 608
* In some instances, you may wish to have the property revalued, in which case you may have to pay for the valuation. Getting a property revalued can be particularly helpful if you believe it has considerably increased in value.
22nd February 2019