Unsure about 5 year fixed rate now.

Glover1862

I've had a final offer from Platform Home Loans for a BTL mortgage which I thought what I wanted at the time. I've not exchanged yet and I'm probably about 3 to 4 weeks away. The deal I got was:

75% LTV 119k - 5 year fixed 4.09% then 5% BoE BR

Repayments £405.00 pm - Prod fee £1999 with £500 cash back added to loan.

Alternative deal from same lender:

75% LTV 117k - 2 year tracker 2.84 then 5% BoE BR

Repayments £281pm - Prod fee £1999 with £500 cash back added to loan.

I'm getting more uneasy with how things are going to work out, quite a bit of doom around and prices softening so I'm not as confident to commiting to 5 years as if I need to sell the ERC is very high on 5yr fixed.

Having had an offer from Platform I'm going to stick with them, before I contact my broker who are poor anyway I wanted to get an opioion on the two deals, what would you choose? I'm self employed and wages sub £30k so probably limited with other lenders.

I've found Info from coop who seem to suggest a £88 charge for changing a mortgage product before completion, I'm hoping Platform will be the same as most of their changes are identical to coop.

Thrugelmir

Glover1862 wrote: »

I'm getting more uneasy with how things are going to work out, quite a bit of doom around and prices softening so I'm not as confident to commiting to 5 years as if I need to sell the ERC is very high on 5yr fixed.

Property is an illiquid investment. Perhaps now is not the time to invest.

Glover1862

Did cross my mind but I'm not getting younger and have the deposit now, so might struggle getting finance later. Also has these reservation before and with wonderful hindsight should have just jumped in then.

It's a decent property and at £156k for a three bed in Luton it's at the FTB or BTL end so fairly easy to sell.

2 year tracker would be cheaper but I'll have the hassle of getting a new deal much sooner, being self employed just so many hoops hence why 5 year fixed seemed attractive, now I'm thinking if I tie in for longer the exit fees will be high should I want to sell or do something else, just wanted to get an idea of what people would do, essentially 5 year fixed or 2 year tracker ? The products fees are high but still work out better than zero product fee and higher rate.

Also, not sure if Platform will change it now, if fairness they've not been too bad, all the issues have been my advisor.

My residential mortgage is with Britannia also the coop group, so a lot of eggs in one basket, particularly as they're not doing to well.

amnblog

Why would you need to sell?


Are you investing for income or capital growth?


Either way selling within 5 years is not the usual approach for BTL investors.


Property is a long term investment.

Glover1862

I wouldn't be looking to sell and it's a long term investment, however times got very tricky 2008 onwards so as the time to exchange gets closer I suppose that's on my mind.

The 4.09% 5 year fixed is not too bad considering it's BTL, didn't consider trackers but £281 pm compared to £405 pm is quite a difference, hence making me think more about it.

amnblog

So it is not about the ERP and selling - it is about profit and cash-flow?

dimbo61

You should be in this for the long term OR forget the whole idea.
Buying and selling costs money so NO point what so ever if you are only going to keep the property for 2 years.
£2000 fee for a 2 year tracker !!!!
So add that to the tracker mortgage payment each month

amnblog

dimbo61 wrote: »

£2000 fee for a 2 year tracker !!!!

Fees are higher on BTL products.


Landlords can offset them against tax so are less sensitive to them.


Also, if the fees can be added to the loan they don't hit cash-flow either.