The Mortgage Works offers a 80% buy to let mortgage product – but is it any good?
The Mortgage Works (TMW) are one of the main UK buy to let lenders in the UK and have had an 80% buy to let mortgage product out in the market for some time.
Their product is only available to professional landlords which means you must have got the least one buy to let property and can prove the rental income for over six months. They also insist that you need to be owner occupier which means you need to be living at your current residential home.
Unlike some buy to let 80% products it is available for remortgages as well as purchases.
The 80% buy to let product is limited to a maximum mortgage amount of £350,000. The loan to value (LTV) then drops significantly to 65% for loans £350,001 upwards, which means a deposit or equity of 35%.
Example of current TMW 80% buy to let mortgages
Based on a purchase price of £200,000 and an interest only mortgage of £160,000.The costs quoted assume that the lender’s fee for arranging the mortgage are added to the loan.
There is a sealing fee of £145 which is payable on the repayment of the loan and a telegraphic transfer fee of £35. The main early repayment charges are 5% of the amount repaid in the fixed period. 10% of the mortgage balance can be overpaid during the fixed period without the main early repayment charge applying.
Product 1: Percentage Arrangement Fee
Initial pay rate 4.14% (APR 5.2)
Valuation Fee £430 / Arrangement fee £4,000 (2.5% of £160,000 mortgage)
Fixed at £565.92 per month until 31/10/2015. After this period the mortgage will revert to the lender’s variable rate at the time. Based on today’s prices this would be £682.11 per month.
Product 2: Flat Arrangement Fee
Initial pay rate 4.99% (APR 5.2)
Valuation Fee £430 / Arrangement fee £995
Fixed at £669.62 per month until 31/10/2015. After this period the mortgage will revert to the lender’s variable rate at the time. Based on today’s prices this would be £669.62 per month.
Good points about The Mortgage Works 80% buy to let mortgage product
The Mortgage Works have managed to retain a high loan to value in the buy to let market even through the tough times. However, to compensate for the added risk they have charged high, and often extortionate arrangements fees. The high fees did however enable them to offer lower initial rates and until recently this helped reduce the amount of rental income required to qualify. TMW now offers a choice of 80% buy to let products with either 2.5% of the loan (£595 min) or a flat £995 which is has proved more desirable for my customers.
The Mortgage Works service is generally good, and referencing very light with proof of other income sources not necessarily required.
Unusually they will lend to age 90 (at the end of the term). This is particularly useful for retired applicants who have limited earned income from pensions who rely on rent to supplement their lifestyles.
Bad points about The Mortgage Works 80% buy to let mortgage product
The Mortgage Works usually appoints E-Surv to manage their surveys and from my experiences they are very conservative when assessing property values to protect the lender. This however, is not so good for the remortgage borrower who may be hoping for a favourable value to realise the amount they wish to borrow. This particularly prevalent where there is a high loan to value borrowing such as an 80% buy to let mortgage is sought. There is an appeal procedure for down valuations but unless recent comparables of properties being sold at the same or higher price are provided this process does not get out of the blocks. So you need to be realistic and research before applying, and if you are uncertain or pushing the limits other 80% buy to let mortgage lenders would probably be preferable.
This lender does not normally like flats over shops. They will consider ex-local authority flats provided the block does not exceed five storeys but might seek a reduced loan to value of 75% to give them extra comfort. If the property is of non standard this is not the lender for you.
For the full information on products and rates and fees please complete the enquiry form on the right-hand side of this page or alternatively call us on T: (020) 7993 2044.
Payam Azadi is a partner at Niche Advice Ltd who are Independent Financial and Mortgage Advisers in London.
The views expressed in this article are based on my own personal general opinions and experiences, and they are not necessarily shared by Niche Advice Limited or other Mortgage Brokers. Rates correct as of 11/09/2013.