Finding cheap Buy to Let Mortgage via Online buy to let calculators on their own are not enough!
Finding a cheap buy to let mortgage can be quite challenging with lots of lenders, aggregators and brokers sharing their own opinions on what is the best solution for you.
A start point may be an online buy to let mortgage calculator. This should be able to provide a guide on the rates in the market but a word of caution it is unlikely to look beyond this narrow view. It’s a bit like holding a telescope round the wrong way. To obtain the correct view you may need expert advice to provide clarity on the wider picture.
How so? Well lets look at the levels of information each provides.
Online Buy to Let Calculators
These tend to hold buy to let product information such as interest rate, early repayment charges and maximum loan limits. It is in no shape or form a Mortgage Offer and there is little or no intelligence based decision making on an individual circumstance. To elaborate there are sixty three buy to let providers in the market. If you run a comparison tool for buy to lets the chances are a handful of these sixty three buy to let lenders will be at the top for all the scenarios the calculator provides. So clearly buy to let mortgage calculators only scratch the surface otherwise the other fifty-odd would not have viable lending propositions and seek alternative areas of finance to operate in, which is not case.
Don’t get me wrong we too offer a buy to let calculator, which is amongst the very best in the market, as its what unsophisticated borrowers demand, but believe me it too has its limitations and should never be used in isolation or a replacement for good advice.
Lenders
The vast majority of Buy to let mortgages are classified outside of regulation. Therefore many of the high street lenders choose not to offer them as there are cost implications of running another process alongside residential mortgages.
They are recognize that the borrowers requirements are likely to be more sophisticated and as such the staff training needs are great.
That said they covert the extra margin potential and lower loan to values from a capital adequacy view point. So in order to make the buy to let market work for them many have set up separate centralized ‘out of town’ processing units. This is a sensible and pragmatic approach. The training focus certainly helps but normally there is a lack of world experience and knowledge beyond the lender’s criteria and products. So the passage to acceptance may be enjoyable but there will always be a nagged doubt as to whether you could have perhaps got a better buy to let mortgage deal elsewhere.
I would also add that these centralized units may not be open directly to the consumer with the institution preferring to push them away to Buy to Let Mortgage Brokers or Financial Advisers to give the advice. These has notably been the case with two of the highest profile buy to let lenders in the last five years Birmingham Midshires (BM Solutions, Lloyds Banking Group) and The Mortgage Works (TMW, Nationwide) who have both shut the doors to the consumer.
Aggregators
The role of aggregators in the mortgage chain has diminished since the heady times of the credit crunch. An aggregator delivers mortgages on a large scale to the lenders. For instance, 50 mortgage applications a day. In return the lender might offer an ‘exclusive’ mortgage product which was not on universal offer. The Aggregators normally work hand-in-hand with intermediaries such as Buy To Let Mortgage Brokers or Financial Advisers, rather than directly with consumers, to generate the required volume.
Buy To Let Mortgage Brokers or Financial Advisers
These are the experts in the field of buy to let advice. A good Buy To Let Mortgage Broker or Financial Adviser will be able to advise on finding a Cheap Buy to Let Mortgage for your individual circumstance. They will consider unilateral criterion across the current sixty three buy to let lenders and understand lender’s exposure limits, affordability assessment, suitable property types and the best surveyors to use. They will not waste your time or money trying to fit you into a lender that is destined to say ‘no’. The Financial Advisers, such as Niche Advice, can take it a stage further as they are able to provide taxation guidance and saving 20%, 40% or even 50% on tax is often more appealing than anything else, as a buy to let used correctly is an investment after all.
If you are looking for a cheap Buy to Let mortgage want the reassurance of working with a professional buy to let mortgage company please contact us on (020) 7993 2044 or alternatively please complete our enquiry form on the right-hand side of this page
Payam Azadi is a partner at Niche Advice Ltd who are Independent Financial and Mortgage Advisers in London.
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