BTL fees, every time?

matty_hunt

Hi. I wonder if one of you nice people can quickly shed some light on this for me...

Im looking at a BTL and may end up having to pay around £6000 in arrangement fees to secure a two year product. After two years if I want to change provider will i need to pay their BTL arrangement fee, potentially another 3%, or, since I will already have a mortgage in place on the property, all be it a BTL, will the new mortgage package be classed as a remortgage and so attract a remortgaging fee instead of the BTL?

Many thanks for any clarification on that. I am tring to get my head around the whole fees v interest rate thing!
cheers

GMS

Each time you change provider there will be a potential fee involved. BTL fees can be huge. Often it can be worth paying a much higher interest rate on a no fee product than paying huge fees to secure a low rate.

A £6,000 fee on a 2 year deal works out at £250 per month so look at other products with no fee for comparison.

Also look for fixed fee products rather than percentage ones if possible.

A broker could be worth a shot as there are some broker only products in the BTL market.

matty_hunt

Thanks for the reply. Im a little confussed as I have been looking at moneysupermarkets website and using their mortgage comparison tool. As I see it, when they use the comparitive overall cost for a two or five year period the arrangement fee is included but since these high percentage fees which equates to anything from £5000 to £9000 are added to the life of the mortgage their real cost is not reflected in the comparison. Plus, on interest only, in two years I will have a larger sum to remortgage. I can see now your simple calculation, above, is the only real way, (plus the interest rate on that extra?) to get comparative cost of each product.

thanks

many thanks

GMS

Be aware of the added fees for the future. Adding the fees would not usually alter the LTV bracket i.e 70k loan on a 100k valuation is 70%. Adding the fees may mean a 73k loan but still being classed as 70% LTV by the lender.

Next time you look to remortgage it would be a balance of 73k so would fall out of a 70% LTV product with a new lender assuming valuation stays the same. Interest only will not reduce the balance obviously.

Using comparison sites will most likely not give all lenders. This is not a biased opinion but you should speak to a broker. More options for BTL at the minute than the high street types.

matty_hunt

Thanks. Going to see one tomorrow. Appreciate you posting.

Thrugelmir

Have a plan for repaying the debt. That's the only way to incur less product fees and obtain better rates as the LTV improves.