Buy to let Mortgage with a Low rate, Low Fees and a good loan to value option – It must be the best deal for you WRONG.
I hear clients say daily that they have tried another broker or bank and have been quoted a specific product with a so-called ‘fantastic rate’ but with buy to let mortgages it is not just about getting the best rate or lowest set-up charges as often the latter can be offset against the rental income. The key to distributing buy to let mortgages is under standing the process, underwriting applied, being honest and certain of the outcome. In short most whole of market brokers such as Niche Advice Limited have access to the same products it’s about selecting the right one.
It’s really frustrating to hear stories of brokers pushing clients down certain lending route knowing full well that it is doomed to fail. They start be dangling a carrot of a cheap rate to applicants and then flip them into an appropriate, and more expensive mortgage, during the process once they have committed to their service. This wastes time and raises false hopes. Some even stop short of trying to rectify the situation and live solely off non-refundable upfront fees.
At Niche Advice we are upfront and transparent preferring to be remunerated only when we have been successful at the point of completion as such we will only select mortgage products for you that fit your circumstances from day one. We will not lead you down the garden path to fantasy land and will not desert you once an application has been submitted, we will follow it all the way through.
So what else you need to watch out for when applying for a buy to let mortgage
Rates and fees:
Rates obviously affect your regular outlay and as such are a key consideration, however in buy to let mortgages they may serve another purpose which is to determine the affordability based on the rental yield. Selection of a product is therefore not a case of looking on a comparison site it’s understanding the dynamics behind them. A call to a professional mortgage broker, such as Niche Advice, is therefore highly recommended.
It is also not uncommon for the set-up fees to be astronomical so make sure you look beyond gimmicky low highline interest rates.
Instead of applying the actual product rate to ascertain the rental coverage requirement, lender’s sometimes use notional internal calculations. For example, in their models they could apply an interest rate factor of say 6% or 7% rather the product rate of 4%. This allows a tolerance for rates to increase during the mortgage term but can be quiet prohibitive on borrowing levels.
All Some lenders require a monthly surplus of rent over the mortgage interest by 25% to allow for rental voids and repairs, others higher.
If you plan to take the buy to let mortgage on a repayment basis some lenders will apply the factor on a repayment basis rather than interest only which would restrict borrowing significantly.
For more information on how we can help source the right Buy to let Mortgage for you, please contact us on 0207 993 2044 or alternatively complete the simple enquiry form on the top right hand side of this page.
Payam Azadi is a partner at Niche Advice Ltd who are Independent Financial and Mortgage Advisers in London.