Got this from Property Hawk:

Quote:The first 25-year fixed-rate mortgage for buy-to-let investors is been launched by the Manchester Building Society.

Chief executive David Cowie said: “To my knowledge, this is the first time ever that a lender has offered a fixed-rate, buy to let mortgage for buy to let investors.The buy to let market is now far more robust than the housing market as a whole.”

The rates on offer are a 5.74 per cent interest rate for capital repayment mortgages and an interest only version at an interest rate of 5.99 per cent, both with a £749 arrangement fee.
MBS will lend up to 75 per cent of the value of a property.
The residential mortgage interest rate is 5.24 per cent with a £995 arrangement fee and MBS will lend up to up to 80 per cent of the value of the property.

Chris Mitton, Market Relationship Manager said “I think the buy to let products will particularly appeal to investors seeking to hold their buy to let property over the long term, and want to lock in certainty of their funding costs for an extended period of time.

Hopefully other lenders will follow suit leading to more competitive rates, but I think this is a positive move.

(18-08-2012 02:43 PM)lynne_davis Wrote:  Got this from Property Hawk:

Quote:The first 25-year fixed-rate mortgage for buy-to-let investors is been launched by the Manchester Building Society.

Chief executive David Cowie said: “To my knowledge, this is the first time ever that a lender has offered a fixed-rate, buy to let mortgage for buy to let investors.The buy to let market is now far more robust than the housing market as a whole.”

The rates on offer are a 5.74 per cent interest rate for capital repayment mortgages and an interest only version at an interest rate of 5.99 per cent, both with a £749 arrangement fee.
MBS will lend up to 75 per cent of the value of a property.
The residential mortgage interest rate is 5.24 per cent with a £995 arrangement fee and MBS will lend up to up to 80 per cent of the value of the property.

Chris Mitton, Market Relationship Manager said “I think the buy to let products will particularly appeal to investors seeking to hold their buy to let property over the long term, and want to lock in certainty of their funding costs for an extended period of time.

I predicted about a year ago that a product like this would come out and I was told by quite a few on PT (including Lisa Orme which surprised me) they thought it would never happen and that if it did it would never sell.

I think Manchester BS will be inundated with apps for this product, it will be interesting to see what happens next.

Excellent product. As long as the redemption rate is not too prohibitive as in 25 years anything can happen then this gives property investment a big step forward towards fixed costs. One of the biggest fears is increases in interest rates (albeit an investor should allow a variable range in any case when they start out.)

If you took out 25 year RGI as well then there is no reason why you cannot have a virtual guaranteed 20%pa cash flow return on your 25K investment. Thats 20% return as money in your pocket every year. And if one is conservative in ones projections and say that prices will at least double in that 25yrs then 40% ROI pa is achievable with ease.

So for a 25K investment with cashflow and capital growth you make 10K pa - Bliss

Why would anyone hesitate even for a second before now piling into the BTL market

When I saw this thread title I wondered if it would mention the rate for 25 years and what it would be. I thought it would be higher at 6.99% to be safe for the lender, but personally I think 5.99% is a great rate for such a long period of time considering I was looking at a Natwest 5 yr fixed at 5.99% with a £1k fee.

I think this is a very interesting product but as mentioned, it would be interesting to know the early redemption %'s for each period of time. I can imagine exiting within the first 5-10 years to be a pretty painful experience!

(19-08-2012 10:46 PM)adamb614940195 Wrote:  When I saw this thread title I wondered if it would mention the rate for 25 years and what it would be. I thought it would be higher at 6.99% to be safe for the lender, but personally I think 5.99% is a great rate for such a long period of time considering I was looking at a Natwest 5 yr fixed at 5.99% with a £1k fee.

I think this is a very interesting product but as mentioned, it would be interesting to know the early redemption %'s for each period of time. I can imagine exiting within the first 5-10 years to be a pretty painful experience!

From http://www.themanchester.co.uk/mbsnew/mo...range.asp:

Quote:ERC: 1.50% months 0-60, 0.75% months 61-84

So you're tied in for the first 5 years at 1.5% ERC, and for the next 2 at half of that. No ERCs after the first 7years. Doesn't sound too bad to me!

Min. value of property = £125K; income requirement £30K for single applicants, £40K for joint; 120% rental coverage required (125% for repayment).

Unfortunately, though, they won't lend to anyone who has more than 4 properties (including the one that this mortgage is on) in their portfolio.

Unfortunately, though, they won't lend to anyone who has more than 4 properties (including the one that this mortgage is on) in their portfolio



Doh my bubble has been burst :-(

Thankfully that limit wouldn't affect me, but to ask others on here:

If you could get a 25 year fixed rate mortgage with the details stated in this thread, would you?

I must admit, 25 years is a long time to fix but those ERCs aren't too prohibitive at all.

(20-08-2012 10:33 AM)adamb614940195 Wrote:  Thankfully that limit wouldn't affect me, but to ask others on here:

If you could get a 25 year fixed rate mortgage with the details stated in this thread, would you?

I must admit, 25 years is a long time to fix but those ERCs aren't too prohibitive at all.

Yes ( im not a financial advisor) but from a personal point of view i would definitely consider this product as part of a balanced portfolio but would not want to put all my eggs in one basket. But with those attractive ERC rates it would be an easier decision to make for sure to go for it. Yes the headline rate is quite high for todays climate but you would be sitting pretty if they shot up to 15% as they did in the distant past and could potentially do so again.

So if peace of mind was very important to you and you were in it for the long haul then yes. I would want to see a decent cashflow per property though myself so if at 5.99% you are cashflowing well and get say 12% ROI pa on your investment capital then it beats many other more standard investments allowing for profits over and above inflation. No one but no one knows whats going to happen 1 year down the road let alone 25 but you have with this product a decent level of security and not too onerous opt out clauses if needs be - so the best of both worlds in my view.

Hi Jonathan,

So the big question is, would you consider going for the repayment option? As the mortgage is 25 years long it is something that *could* be worth considering?

I think this 25 yr mortgage strategy is different from the ones most of us have gone for, where we're on the SVR or possibly on 2-5 yr deals. Switching products at lets say £1k every 2-5 years costs quite a bit of money in the long term, whereas with this product that would be a hassle that would be avoided.

As you've said, it's definitely worth considering for 'a keeper'. I wonder if they'd accept students?