buy to let mortgages

 

Which type of buy to let mortgage is best for me?

It might seem complicated, but there is a really easy way to understand the different types of mortgages – so you can get on with choosing the best mortgage deal to suit you. Fixed rate (set monthly payment) or tracker deals (changing payments) are the most popular, but here is a guide to all of them.

 

Want peace of mind that your monthly mortgage payment won’t change?

A fixed rate mortgage, which often comes in 2-year, 3-year, 5-year or 10-year deals, are often chosen because the rate you pay won’t change during the initial period.

Considerations

Do you plan on selling the house or repaying your mortgage early? If you are, then picking a mortgage rate with a long term will mean that you might have to pay charges, called early repayment charges (ERCS), to exit the mortgage early. If the Bank of England’s interest rate goes down, your payments are fixed, so you won’t benefit from the lower rate. If they go up, however, you’ll know that you won’t be paying more.

 

Don’t mind taking a risk and can afford an increase in payments?

A variable rate mortgage is the bank’s standard mortgage and is higher than most mortgage deals. It is partly based on the Bank of England’s base rate plus an amount on top. It is only really used as a default mortgage when a deal ends.

A tracker mortgage follows the Bank of England’s base rate as it rises or falls, plus a bit extra from the bank. Discounted rate mortgages are a variable rate minus a bit, but they can go up and down like a tracker mortgage. Capped rate mortgages are variable rates that are capped at a certain level, and cashback mortgages are where a bank offers you money to choose their mortgage deal.

Considerations

The amount you pay could go up or down, so it’s important to ensure you can afford a rise in monthly payments – 1, 2 and 3% is a good guide.

 

Have savings and want to pay down your mortgage quicker?

Offset mortgages generally sit at a higher rate than other mortgages but allow you to only pay interest on your mortgage minus your savings amount. The money you would have paid on interest pays your mortgage off quicker. Most have instant access to savings too, so you can withdraw money if you need it.

Considerations

You need to think about how much interest you could earn on a savings account versus the interest rate you are paying on your mortgage. Your mortgage adviser can help you to understand this.

 

The best of the rest

- A 95% mortgage is simply any mortgage than only requires a 5% deposit.
- A flexible mortgage gives you extra benefits like over-payments or payment holidays.
- A first time buyer mortgage is for those purchasing their first home.
- A buy to let mortgage is for investors looking to rent a property out.

Need more mortgage advice? We are here for you on 03300 583 859, or you can send us your details to get the ball rolling.

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