In today’s fluctuating Buy to Let mortgage market, finding the right deal for you can be challenging.
One option worth considering for BTL properties owned personally is the 5-Year Fixed Rate BTL Mortgage with a 2-Year Early Repayment Charge (ERC), specifically designed to offer both stability and flexibility.
Here’s a closer look at this product and how it may benefit you.
Key Features of the 5-Year Fixed Rate Mortgage
- Fixed Rate for 5 Years
With this mortgage, you will enjoy the peace of mind that comes with a fixed interest rate for five years. This means predictable monthly payments, making budgeting easier.
- 2-Year Early Repayment Charge
It only has a 2-Year Early Repayment Charge compared to a traditional BTL mortgage which is usually 5 years. After this period, you can remortgage or switch to another product without incurring any fees. This flexibility allows you to take advantage of lower interest rates if market conditions change.
- Maximise the amount of borrowing
If you wanted a two year fixed rate the stress test calculation is much harsher and on low yielding properties it is sometimes difficult to get 75% loan to value.
With this product as it is for five years, it has a more lenient stress test based on the interest rate you pay rather than the rate +2%, which is common for most lenders.
Who Might Benefit from this?
Ideal Candidates:
- Personal Ownership Only: It is available for property investors who own up to 10 properties if you want to raise additional finance on this mortgage. If it’s just a balance swap there is no limit on the number of BTL properties owned.
- Those Seeking Stability with Flexibility: This mortgage is a great fit for property investors who want the security of a 5-Year Fixed Rate but also wish to have the option to switch after two years without incurring penalties if interest rates drop.
- Clients Considering Shorter Fixed Rates: Customers who are contemplating a 2-Year Fixed Rate mortgage might find this option appealing as it provides an extended three-year fixed rate at the initial terms and potentially greater borrowing.
Who Might Not Find This Product Suitable?
Less Ideal Candidates:
- Limited Company: Sorry, only available for personal ownership.
- Clients Confident in Stable Rates: If you believe that interest rates will not drop in the next two years, you may prefer a standard 5-Year Fixed Rate mortgage without the early repayment charge.
- Those Certain Rates Will Decrease: Customers who are convinced that mortgage rates will be lower in two years may not see the value in paying a premium for the option to switch. They might opt for a straightforward 2-Year Fixed Rate mortgage instead.
Conclusion
The 5-Year Fixed Rate Mortgage with a 2-Year Early Repayment Charge is designed to cater to a specific market segment looking for a blend of security and flexibility.
If you are considering this option or want to learn more about how it fits feel free to reach out.