Buy to let - what rate would you go for?

Sandie11

Hi

I know this is a question designed to be met with a crystal ball, but I would just like to know what you would do.

I am due to remortgage, the best of the bunch seem to be

2 year deal interest @ 3.59 + fees £500

3 year deal interest @ 4.19% + fees £199

5 year deal interest @ 4.19% + fees £1250

Thank you for anyone's opinion

holly_hobby

Well without knowing your financial situ etc, I'll just speak generally.

Essentially your choice of term (and rate), really depends upon how long you anticipate continuing to rent the property out for ... e.,g no use going for a 3 or 5 yr fixed if you anticipate selling in 2 yrs.

How long you want security of rate (and to forecast net (of mge) yield for), OR alternatively your capacity to absorb (or increase rental income) to accomodate a rate higher than 4.19% and still retain a decent net yield.

As you need to consider, if you select the 2 yr rate (which only has a 0.6% saving compared to the 3/5 yr products quoted), that when you come to remortgage in 2 yrs time, the available payrates may be a point or 2 higher than the short to medium term 4.19% deals you have currently sourced. (don't forget to factor in any associated remortgage fees of course, which although are tax deductable, have to initially be found, apart from any product fees that may added).

My personal opinion, if I intended to continue to let for the medium to long term (ie in excess of 5 yrs), would be to go for the 5 yr fixed if the rate didn't exhaust any net yield, despite the slightly initial higher payrate and product fee (which don't forget is a permitted tax deduction if not added).

As I personally don't anticipate, given the current markets, that BTL rates will reduce at all or by any significant amount within the same period, but I do think likely to rise, . and I would personally prefer to know (if possible) what my projected 5 yr net yield will be to allow me to manage the business effictively...... but thats very much a personal thang !

Others will be along with their own opinion, so that you may also muse those over with your own to come to your final conclusion.....

Hope this helps

H x

michaels

Or you could go for a tracker / variable rate if you were sanguine on interest rate risk which would be even cheaper. I would be surpised if the 2 year fix would be cheaper than a 2 year tracker/discount but it is obviously much harder to predict for 5 years.

Conrad

5 year fixed without question, as long as you have no intentions that would have a bearing on this such as planning to sell-up.

I am just buying some investment properties myself and went into this is huge detail and whichever way I looked at it, 5 years fixed was the best option.

Sandie11

holly_hobby wrote: »

Well without knowing your financial situ etc, I'll just speak generally.

Essentially your choice of term (and rate), really depends upon how long you anticipate continuing to rent the property out for ... e.,g no use going for a 3 or 5 yr fixed if you anticipate selling in 2 yrs.

How long you want security of rate (and to forecast net (of mge) yield for), OR alternatively your capacity to absorb (or increase rental income) to accomodate a rate higher than 4.19% and still retain a decent net yield.

As you need to consider, if you select the 2 yr rate (which only has a 0.6% saving compared to the 3/5 yr products quoted), that when you come to remortgage in 2 yrs time, the available payrates may be a point or 2 higher than the short to medium term 4.19% deals you have currently sourced. (don't forget to factor in any associated remortgage fees of course, which although are tax deductable, have to initially be found, apart from any product fees that may added).

My personal opinion, if I intended to continue to let for the medium to long term (ie in excess of 5 yrs), would be to go for the 5 yr fixed if the rate didn't exhaust any net yield, despite the slightly initial higher payrate and product fee (which don't forget is a permitted tax deduction if not added).

As I personally don't anticipate, given the current markets, that BTL rates will reduce at all or by any significant amount within the same period, but I do think likely to rise, . and I would personally prefer to know (if possible) what my projected 5 yr net yield will be to allow me to manage the business effictively...... but thats very much a personal thang !

Others will be along with their own opinion, so that you may also muse those over with your own to come to your final conclusion.....

Hope this helps

H x

Thank you for your opinion, very helpful to know how others view this.

I plan to rent for many years

Sandie11

Conrad wrote: »

5 year fixed without question, as long as you have no intentions that would have a bearing on this such as planning to sell-up.

I am just buying some investment properties myself and went into this is huge detail and whichever way I looked at it, 5 years fixed was the best option.

Thank you for your opinion.

I have been renting for 2 years and this is my first remortgage, i have been very spoilt with my current rate of 2.74% and didnt realise how good this was, so jumping to 4.19% is quite a leap but at least over the 5 years i can be certain of my costs, thank you for your input.