Best or typical BTL rates?

Brighty

Hi all

I posted the thread below 3.5yrs ago, it won't let me bump it, so i've started this one.
https://forums.moneysavingexpert.com/discussion/4827716

Hi guys

I own a rental property 50/50 with my brother, we did live there, but he relocated abroad and i relocated to the North so we let it out with consent to let from Nationwide nearly 4 years ago.

We were sat happily on nationwide's BMR of 2.5%, but on renewing our consent to let earlier this year we have now been hit with an additional 1.5% so are now sat on 4% and also exposed to any potential base rate rise.

Can we get a better buy to let rate than this taking into account fees? Preferably fixed rate i think. Had a look online and rates don't seem a huge amount lower than what we're on, but with large fees to consider. But apparently the best deals are broker only, how much lower are these?

Outstanding repayment mortgage is 67k with 12.5 yrs left to run. Property value is 230-240k, so we're below 30% LTV

We also own 2 other mortgage free rental properties 50/50 if that helps in any way, plus have mortgages on seperate residential properies each.

That was 3.5yrs ago, there didn't seem much saving to be made at the time, so did nothing about it, we're still sat on nationwide's BMR with a now 1% letting fee.

Now things have moved on and rates are lower, is it time for a rethink and a remortgage you think?

What are typical BTL mortgage rates and fees these days?

Current rate is Nationwide BMR of 2.25% + 1% letting fee = 3.25%

Outstanding balance is £51,500 with 9yrs left

Property value is £370-£380k, so way down at 15% LTV

Thanks

Brighty

Lilla_D

Hi Brighty,

Just a quick look in the sourcing system shows me nearly a hundred deals below 2% for such a low LTV deal. However, this is on the assumption that the property doesn't present any limitations (e.g. it's not an ex-council 20th floor deck access flat with 50 years left on the lease ) and that your personal and rental income situation and credit history are all good for the lenders.

So yes, it may be worth having a look at your remortgage options this time round

lovinituk

We're currently paying a lot less than 4% (although I can't remember the exact figure) on a higher LTV than yours with The Mortgage Works which is Nationwides BTL arm.

kingstreet

With only £50k outstanding, any fees will be a lot more damaging than the rate.

1% off the rate will save you about £40 a month, but BTLs can be fee-heavy and it obviously won't be cost-effective to pay £2k in fees to save that for only two or three years.

Compare carefully.

lovinituk

Just looked up our rate with The Mortgage Works. 2.79% on a 2 year fixed. There was a £995 arrangement fee with free legals and valuation. That was at the beginning of last year.

Brighty

Thanks all
I know there'll be better rates out there, but as kingstreet says, fees could wipe out any saving, even if I could go from 3.25% down to 1.75%, that's only a £36 a month saving, so if it was only a 2 yr deal, even a £1k fee makes it more expensive to switch, I need a long fix with little to no fee, does that exist and at what sort of rate?

Get the feeling we'll be staying put, especially as our mortgage interest is tax deductible against rental income, so for every £1 saved, my tax bill goes up 20p, so I'll only see 80% of any saving anyway

lovinituk

Brighty wrote: »

Get the feeling we'll be staying put, especially as our mortgage interest is tax deductible against rental income, so for every £1 saved, my tax bill goes up 20p, so I'll only see 80% of any saving anyway

Are you a higher rate tax payer, or close to being? If so you need to understand the implications of section 24 which means your mortgage interest will no longer be tax deductible. It's being phased out between now and 2020.

Brighty

lovinituk wrote: »

Are you a higher rate tax payer, or close to being? If so you need to understand the implications of section 24 which means your mortgage interest will no longer be tax deductible. It's being phased out between now and 2020.

Standard rate tax payer, even with the rental income, it has no effect on me at the moment. It is remaining tax deductable, just limited to 20% People keep saying on here it's being phased out without mentioning that the 20% remains

lovinituk

Brighty wrote: »

Standard rate tax payer, even with the rental income, it has no effect on me at the moment. It is remaining tax deductable, just limited to 20% People keep saying on here it's being phased out without mentioning that the 20% remains

You're sort of right but it will no longer be tax deductible as that would make it an expense which it no longer will be. It will be counted as income so could push someone in to the next tax bracket. But then you get a 20% tax credit to off set it. Basically the tax offset is being done after the income rather than before. That's why I asked if you were close to being a higher rate tax payer.

Brighty

lovinituk wrote: »

You're sort of right but it will no longer be tax deductible as that would make it an expense which it no longer will be. It will be counted as income so could push someone in to the next tax bracket. But then you get a 20% tax credit to off set it. Basically the tax offset is being done after the income rather than before. That's why I asked if you were close to being a higher rate tax payer.

Understood
It may affect me in the future, but currently i earn £35k plus £5k rental income, interest on our small £51k mortgage is minimal, so i will still sneak under until i get a substantial pay rise, which isn't on the horizon unfortunately