Buy to Let-Does this sound like a good deal

vinuela13

Looking to borrow £41,250 (25% LTV).
Quoted 2yr fixed rate at 5.3%. Monthly interest only repayment of £185.00.
0.95% arrangement fee. Valuation fee between £200-300.
Does this sound OK?

kingstreet

With the relatively small amount you're borrowing and the shortness of the deal you require, you should be looking to keep your upfront fees as low as possible. I assume this is a purchase?

For a 25% mortgage on a purchase of £165k, I'd look at the Mortgage Works two year fix at 5.59%, if that's the kind of deal you desire. The interest-only payment for your £41,250 mortgage would be £192.16, but the upfront costs are only £185 with a lowish £145 deeds release fee when you repay the mortgage.

Your deal is £7 per month cheaper for two years - that's £170 saved, but your upfront fees are going to be £600 to £700.

Alternative offer is Coventry's Godiva two year fix at 4.65%. The payments would be £159.84. The set-up costs are higher at £285 with £125 final fee on repayment. Compared to your offer, it has better payments and a better set up cost profile.

kingstreet

If it's a remortgage, the Godiva deal is the same and has free-legals.

vinuela13

I think that maybe we are slightly restricted as my husband is self employed and this has maybe narrowed our choice of lender.

kingstreet

diddlyidi wrote: »

I think that maybe we are slightly restricted as my husband is self employed and this has maybe narrowed our choice of lender.

Maybe. But The Mortgage Works aren't interested in personal income as long as the rental income is 125% of the interest-only payment.

vinuela13

Thanks, just having a look on their website

vinuela13

Is it the 2yr fixed at 5.79%?

kingstreet

diddlyidi wrote: »

Is it the 2yr fixed at 5.79%?

TMW? No. 5.59.

kingstreet

I don't know if you're a first time landlord, a subsequent buyer or remortgaging an existing buy to let, so the rate may be different. The point is, you can avoid the upfront costs and that's going to save you money.

vinuela13

Sorry forgot to say first time landlord. We can put a bigger deposit down if needed

kingstreet

diddlyidi wrote: »

Sorry forgot to say first time landlord. We can put a bigger deposit down if needed

You don't need to. You're only borrowing 25% as it is. IIRC the first-time landlord product is 5.39% for a loan to value of under 65%.