Buy to let mortgage rate

nrsql

Wrong eaxample - see below - this one has early repayment penalties.
Been offered a buy to let through themoneycentre.net.

interest only
5.45% interest rate per annum
fee £495
Monthly interest will cost £ 1,202.25

There's valuation on top of that.

That's on £ 264,715.00 including fees (on a £400,000 property).
I would probably want less than that but .....

Which all looks a bit too good
One concern is
>> You will never have to fill in an application form as we will complete them for you.
Which sounds a bit like they will try to stop me seeing the t's and c's - but that's not a problem, I just wouldn't go though with it.
Any thoughts?

herbiesjp

Potentially there could be a few cheaper rates - but as ever this will depend on circumstances and expected rental income as to whther you will be eligible

nrsql

Rental income covers a lot more than I am borrowing and I have good credit rating (although am currently stoozing 39k - reducing to 23k next week).

oops sorry - posted the wrong one - that has 3% repayment penalty for 3 yrs 1% thereafter.

one I am looking at is 5.74%
bank base rate plus a margin of 1.75% per annum, less a discount of 0.76% per annum during the first three years.
£200,000 loan = £960.25 p.m. interest only.
inc £749 lender's arrangement fee
An application fee of £399 is payable. The fee is inclusive of valuation, rental assessment and booking fees
There are no early repayment charges associated with this mortgage

Overpayments (up to double the contracted monthly payment) are allowed without penalty and may be re-drawn. Interest is calculated on a daily basis, in advance, and applied on the first day of the month. This means that whenever you make an overpayment it will be reflected from the first day of the month following the overpayment.

I like the last bit too.

Given up trying to sell my house and am going to rent it out (going to rent in London near work to save about £600 / month travel costs - but more important time saving) - hopefully signing agreement next week for tenant to move in at end of month. Torn between no mortgage and large mortgage.

meanmachine_2

Can I ask whether you have any experience of being a landlord?

Also what is the rental yield on this £400K property?

That will tell you whether it's a good investment or not.

I take it you're withdrawing all the equity in your home to pay for this?

Do you have a fall back plan should house prices take a tumble?

Just a few basic thoughts for you. If you're happy with the answers to all of these then it's a good investment.

If not, then it's not.

nrsql

>> Can I ask whether you have any experience of being a landlord?
Yes

>> Also what is the rental yield on this £400K property?
Not brilliant but haven't been able to sell at a reasonable (or unreasonable price).
Got to be better than a single person living in a 4 bedroomed house though.

>> I take it you're withdrawing all the equity in your home to pay for this?
Nope - this is my home at the moment. Just fed up wasting time and money commuting. I tend to work in the city or abroad so not a very useful base.

>> Do you have a fall back plan should house prices take a tumble?
No need as there's nothing dependent on property prices. Have been expecting this for about 3 years and will buy more properties when it happens if conditions are right.

Read a headline in the Times over someones shoulder which said that as house prices are still increasing it means that the crash will be softer than expected or not happen at all.

I would dispute the first bit - would want to know the sample size.
More I don't see how they derived the result - I would have said the opposite. The longer prices rise the worse the crash - unless income rises faster which I don't see.

The question was just about the mortgage.
I wouldn't buy this property to rent out but as I've already got it it doesn't seem a bad option.

meanmachine_2

Fair enough. Thanks for the reply.

Your gearing seems low, so you should be fine.

It's the Johnny Come Latelys that are going to get burnt - but we all know that anyway.

nrsql

Yep - I've been waiting a couple of years to buy more rental properties and the numbers are just getting worse. It's quite difficult to find anything viable at the moment - and if you do it's going to be fairly marginal so you have to make sure you have time to spend on the deal and be prepared to play hardball. Not the time for anyone new to get into the game without a lot of research and spare funds.

herbiesjp

Again there are cheaper schemes out there in terms of rates and fees - what exactly will be the expected rental income?

nrsql

1650 / month but that shouldn't really matter as I can set the mortgage value to suit the lender.
I don't need any particular value - just looking for a good deal (to decide whether or not to take out a mortgage).