The Mortgage Works has announced it is to cut early repayment charges relating to all new buy to let mortgages agreed from March 06
A reducing scale will mean landlords seeking fixed rate deals of two, three or five years will see their early repayment charges reduced.
The same scale will also apply to two-year tracker deals and lifetime variable loans cases.
Paying less over a fixed term
This means a customer redeeming before their two-year fixed rate deal ends will now pay an early repayment charge of three per cent in year one and two per cent in year two.
Customers with a two year tracker will pay an early repayment charge of two per cent in year one and one per cent in year two while those with three year fixed deals will see early repayment charges set at four per cent, three per cent and two per cent during the fixed period.
For five year fixes, an early repayment charge of six per cent in year one will be applicable declining by one per cent each year to end on two per cent in the final year of the fixed term.
Charges relating to The Mortgage Work’s ten year deal – currently the longest fixed rate product in the buy to let sector – will not be reduced as they already operate on a stepped scale.
This announcement marks a clear change from previous deals where borrowers would face early repayment charges of five per cent in each of a two or three year fixed period.
For five year deals, repayment charges were previously set at seven per cent in year one, six per cent in year two and five per cent for each of the remaining years of the fixed period.
Overall, this means customers will pay less if they redeem towards the end of their mortgage deal with the rate changes meaning that costs will reduce each year.
Henry Jordan, The Mortgage Works’ Managing Director, explained:
“This move by The Mortgage Works to step early repayment charges will provide landlords with greater flexibility, alongside offering some of the most competitive early repayment charges on the market.”