What is the Best BTL at the moment? To refinance or to wait?

static999

My 2 yr C&G tracker (BOE + 0.14%) is due end of Sept but I've been considering to fixed it for a while now. I was looking at Nationwide 5 yr BTL fixed at 5.83% which was withdrawn just before Easter! :mad:

It is a home loan with 90% mortgage but I've got C&G's permission to rent it out for the 2nd yr. Ideally, I want to convert this to a BTL loan asap for a longer term ie looking at a 5 yr fixed loan.

Loan = 287,995 (90%)
Current MV = 400k
Rental = 395p/w
Early repayment charge = Nil + Admin fees of GBP 225

Do you think
1. I should secure a 5 yr fixed BTL now or wait a while longer? I'm afraid interest rates would get worse
2. What is the best BTL loan at the moment?

Thanks

epz_2

i would seriously look into selling, a lot of btl mortgages require 80%, even 75% ltv and its going down.

the rent on the property will barely covering the interest assuming you can get a loan at 6% which is dubious and thats not covering wear and tear on the place/extra insurance etc.

luckyfool

epz wrote: »

i would seriously look into selling, a lot of btl mortgages require 80%, even 75% ltv and its going down.

the rent on the property will barely covering the interest assuming you can get a loan at 6% which is dubious and thats not covering wear and tear on the place/extra insurance etc.

The current ltv is alot lower than 90% now so that would not be an issue.

luckyfool

Your current ltv is 72% percent so there would not be any trouble lining up a Buy to Let deal. Some lenders will actually lend on a non-status basis and rates appear to be heading up, so if you do want to keep the property on then it might be an idea to get it sorted sooner rather than later.

Also, if you get a rate of 6%, then the interest payment would be £1439, relative to rent of £1711, so rental cover of 118% would be relatively comfortable in todays market.

e.g. The Mortgage Works (Nationwide) offer 10 and 15 yr buy to let portable fixed rates with no arrangement fee for 6.19% and 6.09% respectively and your rental cover would be more than sufficient for those products.

You can also get much lower headline rates on shorter term deals, though you will find hefty percentage arrangement fees getting added on.

I would strongly recommend researching your options thoroughly with a broker and deciding whether you are keeping the property on as a buy to let, and if so make your move as soon as possible to secure the rate.

Luckyfool

twjnorth

Hi

I'm in a similar position - got a two year fixed deal ending next month with the Mortgage Works.

Property Value 180,000
Loan Value 122,842
LTV 68%
Rental 750 pcm

The best deal i can get with the existing provider is a 3 or 5 year fixed deal at 6.39% or 6.29% respectively with no arrangement fees and (as the mortgage is already with them, no paperwork / valuations etc..).

I've tried a couple of brokers and they havent come up with anything better than that over the same period. None of these deals will actually allow the mortgage payments to cover the rent at this time and the best one is down by about £40 per month. I can cover this shortfall from one of the other rented properties but obviously it's better if they all stand on their own.

I've got three properties rented out and i've always gone with repayment mortgages with them. One broker gave me figures for a repayment mortgage over 5 years with a rate of 6.13% with a setup fee of £699 and with monthly repayments of £777 but he then also said this mortgage allows overpayments of up to 10% p.a. without penalties and if i took it as an interest only mortgage, the monthly payments would be £628 per month and i could make the overpayments by standing order upto the rental amount and effectively get the same benefit as a repayment mortgage but with lower monthly repayments. It has no redemption penalties after the fixed period

Does anyone else here with Buy-To-Let properties do this and are there any downsides to this approach. It seems on face value to be a good option as the capital will still be reduced and the monthly payments will be below the rental income.

Thanks
Trevor

Griptool

PWPU

static999

Have you check Nationwide 5 yr fixed at 6.09%. Arrangement fees = £695.

I prefer an interest only loan for investment properties & use the surplus (if any) to invest elsewhere. Especially with current economic conditions, if I'm cash rich I'm able to move onto the next venture quickly.

I know quite a number of people that opt for principal + interest as their goal is to pay off the loan as quickly as they can. They also feel much better knowing their mortgage is reducing each month. However, I think the idea of getting an interest only loan & having overpayment up to the rental amount is a good one. Obviously the downside is the repayments aren't tax deductible and you can't have access to the cash if you need it. I don't know if you have a mortgage on your own home. If you do, I would use the extra to payoff the home mortgage instead.

owitemisermusa

Griptool wrote: »

PWPU

You again.

luckyfool

static999 wrote: »

Have you check Nationwide 5 yr fixed at 6.09%. Arrangement fees = £695.
quote]


Nationwide are a residential lender, and will not lend on a Buy to Let property.

static999

Nationwide are a residential lender, and will not lend on a Buy to Let property.

Sorry, was refering to UCB which is a subsidiary of Nationwide.

luckyfool

static999 wrote: »

Sorry, was refering to UCB which is a subsidiary of Nationwide.

Fair enough. The Mortgage Works are his current lender, and as they are also owned by Nationwide nowI don't think they will allow him to move between lenders. I could be wrong though.