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  • Mortgages & Finance

    How to evaluate BTL mortgage products

    In this video, Mark Alefounder of Property Tribes Financial Services* explains how to evaluate a BTL mortgage product and that landlords must understand that the lowest interest rate may not necessarily be the most appropriate:





    We are also regularly hearing stories of landlords who have applied for certain mortgage products, only to find that they are rejected because they, or their prospective property purchase, does not fit the criteria of the product. This can impact on a landlord's credit rating.

    Key features of a BTL mortgage product:

    1. The interest rate. Worth noting that this may not be the rate that the lender stacks the deal at!

    2. The stress rate. This is the amount of coverage required for the rent over the mortgage. In the past this has typically been 125% but we are seeing more and more lenders putting this up to 135%.

    3. The terms and conditions. A vanilla BTL product cannot be used for refurbishments or HMOs for instance. Be clear on what you need the product for and ensure that you get an appropriate product for what you are trying to achieve.

    4. Fees payable. These can be paid upfront or added to the mortgage.

    5. Loan to value. The maximum LTV for BTL is typically 85%, but you can expect higher rates to access such products. The larger deposit you put in, the better interest rate you should be able to secure.

    6. Criteria. Some products are only for experienced landlords or landlords with a certain number of properties or who meet certain criteria. The product may not accept ex-LHA properties or properties of a certain construction type. Be clear that you and your prospective property fit the criteria of the product you are applying for.

    7. Freebies. Some products come with free valuations or free legals.

    8. Early repayment charges. Many products have these, usually on short fixed term rates, so be sure that you are going to hold the property for longer than the period of the fixed rate, to ensure that you do not incur these significant charges.

    If you have any questions on this topic, please post them here and Mark will be happy to answer them.

    *Commercial partner of Property Tribes

    [Image: house.png]Related content:

    Buying a property in a limited company structure vs. your own name

    Time is of the essence for landlords looking to minimise the amount of money they put into property deals

    Getting property deals funded

    Lifecycle of a landlord from a finance perspective

    Getting HMO deals financed

    Deal stacking calculation
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    Great to see PT:FS recommending Total to Pay.

    It something we've been advocating for a long time, BTL TIP: Total to Pay over X Years.

    The headline rates are sometimes misleading.
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    YOU CAN REACH ME AT BESPOKE FINANCE or MY TEAM AT 08009202001


    Hi Adam

    For nearly 23 years now (the Team was originally formed in Jan 1993) we have always only recommended mortgage and loan products on an overall cost basis taking in to consideration our Clients' future flexibility requirements too.

    The search results listed in the mortgage sourcing tables on https://www.PropertyTribesMortgages.com can also be sorted in TTP order to help our Clients see a 'value' guide to the products selected.

    Transparency, honesty and professionalism are key values of our Company.

    Glad you like this video. Other useful and helpful hints, tips and video guides can be found here > https://www.propertytribesfinancialservices.com/tv/ (and more to come - heavy day of filming this week!! Shy )
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    New research from MoneyFacts show that choosing an initially more expensive but longer-term deal might save you a considerable amount of money.

    “The market is full of uncertainty, and for that reason borrowers may find themselves better off with a five-year fixed rate mortgage rather than a two-year option,” said Rachel Springall, Finance Expert at Moneyfacts.co.uk.

    Why? Because the source of the cheap money mortgage lenders are using to cover cheap rates is ending.

    “In 2018 the Funding for Lending Scheme (FLS) will officially come to an end, which means that the cheap money lenders have had access to for four years will dry up, causing interest rates to rise,” Springall said.

    “The upcoming EU referendum is also likely to have a significant impact, which means that the mortgage sector is likely to start changing well before the Bank of England increases base rate.”

    Full/source story

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