Buy to let product that does what it says on the tin

by Neil Patterson

12:47 PM, 29th June 2012
About 9 years ago

Buy to let product that does what it says on the tin

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Buy to let product that does what it says on the tin

I spent all day yesterday updating the mortgage calculator making sure all the usual little lenders’ tweaks had been uploaded and any interesting new products were included, when I ran across what I think is the Yorkshire tea, or a sliced white loaf of a the buy to let product market.

It is nothing spectacular just a good solid no frills value for money product by Godiva owned by the Coventry building Society. It is a 4.25% variable mortgage, which doesn’t sound exciting, but I will tell you why I like it the same way as my vanilla ice cream.

Godiva 4.25% Flexx mortgage (65% LTV)

4.25% Variable rate for the term of the mortgage

Early repayment Charges – None

Fees – Arrangement a flat £999 and Booking £250

Incentives – One mortgage valuation included up to a maximum of £700 and a remortgage transfer service included

Overall cost for comparison – 4.4% APR

Cost over 3 years interest only for a £100,000 loan not including incentives = £14126.37

What this product offers is a good rate for the whole term of the mortgage and not for a short number of years. Therefore when you look at the costs, which are quite low and flat amounts, you need to remember that there will be no immediate need to remortgage and face all these cost again after an initial discounted or fixed period has expired.

If you remortgage every 2-3 years, as you need to on many other products chasing the best rates, costs will quickly mount up along with increasing the loan size if you add the fees. Therefore if this rate remained competitive, and you were not looking to raise capital by releasing equity, the savings made by not having to remortgage could be substantial.

There are also no Early repayment charges should you change your mind, or circumstances in the future. Along with the extended product term this mortgage gives you a lot of flexibility without being tied in, which in my opinion is worth a lot more than making a potentially expensive mistake.

The risk of this product is that the rate is the lenders own variable and can be changed at any time, so could become uncompetitive in the future. However they also offer a Standard Variable rate with no fees at 4.74% which is still good value and gives a price point at which the Flexx mortgage should remain below. I have also been watching Godiva for a number of years now and they have always offered reasonable value for money in the past with the get out of jail fee card card being no early repayment charges.

This is only a 65% loan to value product and every client has different circumstance that may not fit one lender’s criteria, but I wanted to share what sort of products from years of experience that tend to catch my attention.

To discuss a specific Buy to Let deal you can call us on 01603 489118 or email info@property118.com

If you would like to add your own requirements and search for the most popular available Buy to Let products please click here

Comments

8:07 AM, 30th June 2012
About 9 years ago

About time someone said that publicly, about u don't have to re-mortgage in 3 years if u don't want to. I used to get sick of the brokers that say 'Well, switch it in 3 years time when the deal ends', Ooh yeh, pay another £300 valuation, £300 solicitor, possible £2000 lender fee, we never know where the lender market will be in 3 years time, so if u can get a good deal u can STICK WITH if u have to & don't need to pay to switch, all the better. Here's some notes on Godiva for those that didn't know, because I do believe they won't refund u any fees once u pay any money to start the process off: 'The maximum number of properties that can be held per household with the Coventry Building Society Group is three; the maximum number of rental properties a household can have in mortgage with all lenders is ten'.

Recardo Knights

8:21 AM, 30th June 2012
About 9 years ago

Hi I recently remortgaged with Godiva for a 2 year fixed rate of 3.99%, My fixed rate with BM solutions was comming toan end and they would not offer a decent fixed rate renewal, and they also wanted another arangement fee to change the paperwork, are these lenders getting greedy? the original mortgage was taken out two years ago and the fee was then over £2,000. So instead of doing me a good deal for me as an existing customer I looked around and found Godiva. There arrangment fee was about £1200 but because of th 3.99% over 2 years I would save over £2000 on the new BM varable rate in that time , assuming rates did not go up.
For some of us the low rates have been good, but there is always the thought they will go up. I thought a few years ago that the Bank Base rate would stay low and was happy to stick with my Variable rate on 4 mortgages, only planing to shop arround when rates started to climb. But once again the greed of theese lenders is astonishing. Because there is no movement in the Bank of England Base Rate, some of these lenders have started putting up there own rates to generate more money. The bonuses have to come from somewere! I brought my first BTL 10 years ago and now have five properties, over the years mortgages have changed or been taken over buy another company. I do not remember reading anything on all those mortgage offers that a provider could put up their varable rates anytime they felt like it, it was alwas x% above base rate. I expect others will now follow this trend. Interesting to know that my first arrangement fee was about £250, now they looking for £999 -£4000 it must be a lot of paper work. They also charge a transfer fee! give me your acc number and I can do the transfer on my computer from home on the internet for free.
For the next 2 years Godiva will save me money and I know what the monthly payment is, so peace of mind. The only thing I had to quirey with them is they want the mortgage interest rate payed in advance so borrow the money on the 1st June and you have to pay the interest payment on the 1st June and that covers the interes for a month. Is this legal. if i lend you £1000 pound at 10%pm, do you have to give me £100 for the interes on the day I lend you the money? Because my mortgage was completed in the middle of the month I now find I am Payiny 2.5 months mortgage in the space of 6 weeks
Godiva was of

Mark Alexander

9:21 AM, 30th June 2012
About 9 years ago

It is perfectly legal for lenders to charge and collect interest daily/weekly/monthly/yearly in advance or in arrears providing that's clearly stated in their paperwork.

I agree with Neil that the simplicity of Godiva's latest product is it's brilliance.

11:26 AM, 30th June 2012
About 9 years ago

Hi Neil
I have a portfolio of 55 properties and because of this the only lender available to me is TMW who wont give any more than 70% LTV because of the amount of properties I have.
Interestingly, because of the bank base rate at 0.5% and all my mortages, when finished, went down to between 2% and 2.5% over base I sweep the board at 3.3% on the whole of the portfolio.
Good news for the current portfolio but funding is becoming increasingly difficult for me to build on this.
Does Godiva have a maximum of buy to let mortgages allowed? Also is there a minimum earning required?
Most lenders wont take rental income and you have to earn money in some other form of business. Some creative use of LLC companies usually does the trick but, in today`s climate, I would have thought rental income was one of the top viable income sources - and I have never had a void period on any property.
Be interested if Godiva would be ideal for me?
On another note I run a bridging company which lends secured short term loans mainly for property investors allowing them to purchase for cash and re-mortgage at true value 6 months down the road created since Mortgage Express firstly stopped "back to back" deals and falling by the wayside. (bring back 2005!)

Mark Alexander

11:33 AM, 30th June 2012
About 9 years ago

Hi Shaun

I'd suggest you give Neil a call on Monday - 01603 489118.

22:17 PM, 30th June 2012
About 9 years ago

It seems to me that experienced LL with extensive portfolios will increasingly be unable to source viable mortgage products.
If interest rates go up these portfolios will become unviable.
Mortgage rates should be no more than 2%, this will give the bank a margin of 1.5%.
This is the sort of margin they used to work with.
These banks who have fraudulently adjusted the LIBOR rate which affects everything need to be brought to heel and forced to lend at the appropriate rate to reflect the BBR like they always did.
The fact that the BBR is so low should be passed onto consumers which would have positive effect on the whole mortgage market.
If mortgages are not brought into line with prevailing interest rates as and when the BBR increases there would be a massive default if margins which are presently 3-4% are not reduced to an almost standard 1 %.
One should be able to obtain a BTL mortgage for a term of 70 years if aged 18.
Property is increasingly now being held for a long term.
The days of massive capital increases are long gone.
Continuity is required and BTL mortgages should have similar if not longer terms than residential mortgages.
Otherwise there will be a crisis of affordable funding as and when interest rates increase.
Might be academic as I don't see rates increasing for years.
LL want to future proof their investment just like a residential customer.
Long term tracker mortgages are what most people want so as not to be at the mercy of SVR's and continual remortgage fees.
These trackers must be affordable; 2% ABBR would be acceptable for long terms
Willm this happen?
Ans
NO
Mortgage funding for BTL is going to get a lot less affordable as things go on.

Neil Patterson

15:26 PM, 2nd July 2012
About 9 years ago

Hi Shaun,
Godiva do have a minimum income requirement of £25,000, and the maximum number of properties you can own that are mortgaged is 10.

Neil Patterson

15:30 PM, 2nd July 2012
About 9 years ago

I agree Mick.
Back in the day when I was a mortgage consultant my personal favourite BTL products were the Platform lifetime trackers for the very reason you mention, but obviously only if they were a good fit with the client.

Neil Patterson

15:40 PM, 2nd July 2012
About 9 years ago

I will not defend the Banks especially with the current headlines, but one of the reasons for the massive margins over the BofE rate is the requirement for them to re-capitalise. At one point for every £1 they held they were lending out £70. Under recommendations from the BofE this is now closer to £30. Hence the cost of lending for the banks has increased. The 0.5% BofE rate is the overnight rate to secure any debit positions not what they actually lend to each other at for commercial gain (LIBOR). Having said that we now can't believe what that rate actual is either. The more you look into it the more you realise what a tangled mess the whole situation is even before we mention Europe.

20:57 PM, 6th July 2012
About 9 years ago

Another problem for existing landlords looking to remortgage: I think Godiva's top age limit for the older of two joint BTL property owners is 75 (like most others) - is that correct? Not ideal if you are running your BTL business post-"retirement".


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