Did you buy a BTL property just before the introduction of the stamp duty surcharge? Yes? If you took out a 2-year buy to let mortgage, now is the time to remortgage onto a better product to avoid paying your lender’s more expensive Standard Variable Rate each month.
You may remember that during the first three months of 2016 there was a surge in mortgage activity as landlords rushed to complete purchases ahead of the introduction of the 3% surcharge in stamp duty due on purchases of additional property such as buy to lets and second homes.
Quite a few landlords opted for 2-year rates. At the time (March 2016), the average price of a 2-year fixed rate buy to let mortgage was 3.16% and a tracker was 2.89%.
Last month, on average, 2-year fixed rates were actually a little bit cheaper than they were two years ago (2.98%). And trackers are now slightly more expensive, and surprisingly, at an average of 3.05%, they are more expensive than the fixed rate!
As you know, once the 2-year period ends your mortgage will roll on to the lender’s more expensive Standard Variable Rate.
If took out a 2-year buy to let mortgage in Q1 2016 you will soon be paying more each month – unless you remortgage.
Mortgage Flow - our buy to let mortgage sourcing system – shows us that lenders’ SVRs currently range from 3.43% to 6.58%.
Whilst 2-year fixed rate buy to let mortgages are well-priced at the moment, you might also consider 5-year fixed rates which provider longer protection against rate rises and also reduce the frequency of having to pay the fees associated with refinancing. You can search these rates using our Buy to Let Calculator and Rate Finder.
Although not quite as cheap, at an average of 3.54% in December, five-year fixed rates are still very well priced, and over time, may well be cheaper than their two-year counterparts if you factor in finance costs. Add to this the fact that the stress test calculation on five-year rates is more generous meaning you can borrow more.
At the end of the day, it’s about saving money and that’s where we come in. If you would like me to see if I can better your existing rate and cut your monthly mortgage payment, then please get in touch so that we ensure you remortgage in time to avoid rolling onto your lenders SVR.
As usual my direct line is 01732 471647 to chat through the options. Or email me the details of your current mortgage so that I can find you a better rate.
You may also be interested in:
Buy to Let Calculator & Rate Finder
Find and compare the latest buy to let mortgage rates
Guide to completing the Property Portfolio Spreadsheet
Let us assess your property portfolio FREE of charge. A downloadable form designed to capture all the residential property portfolio information lenders will require to assess a buy to let mortgage or remortgage applications.
10th January 2018