Godiva resurrect buy to let capped rates

by Neil Patterson

13:34 PM, 23rd May 2012
About 9 years ago

Godiva resurrect buy to let capped rates

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Godiva resurrect buy to let capped rates

Godiva the specialist buy to let arm of the Coventry Building society is bringing capped rates back into the market after their disappearance during the credit crunch.

A capped rate is a variable mortgage that can move up or down with fluctuations in interest rates, but will not increase beyond the “capped” pay rate during the term of the product. The advantage is that you can take a potentially cheaper variable rate without the risk of it increasing beyond a defined interest rate.

Demand for, and supply of, capped rates stopped when the credit crunch took hold and the Bank of England Base rate reduced in stages down to 0.5% and did not look like recovering in the short term. In the example product below the Bank of England base rate would have to increase above 2% during the 2 year term for the cap to be enforced.

Product detail and criteria for Godiva 5.3% Capped rate

Bank Base Rate (currently 0.5%) plus 3.3% until 30.07.14 meaning you will pay a rate of 3.8% variable capped to a maximum pay rate of 5.3%.

Reversion rate after the initial 2 year period is the Godiva Standard Variable Rate for the remainder of the mortgage, which is currently 4.74%.

Overall cost for comparison 4.8% APR.

Maximum Loan to Value 65%.

Arrangement fee of £999 can be added on top of the maximum 65% LTV and a Booking fee of £250 paid on application.

Incentives included are a Remortgage Transfer Service and one mortgage valuation up to £700.

Early repayment charges are 3% of the balance repaid until 30.07.14.

The amount you can borrow is calculated by the monthly rental income having to cover the interest only mortgage payment by 125%. This gives you the ability to borrow up to 252.63 times the property’s monthly rental income as assessed by the lender’s valuation survey up to 65% LTV.

Maximum loan amount £500,000 over 50% LTV and Minimum loan amount £25,001.

Minimum income £25,000 for sole applicants, or £30,000 for joint.

Must already own UK property (not available to First Time Buyers).

No HMOs with the exception of student lets up to a maximum of 4 students.

Cost over the 2 years not including incentives on a £100,000 interest only advance = £8,924.92 To see how this is calculated click here for previous article “How to choose a Buy to Let mortgage based purely on cost”

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


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Comments

15:50 PM, 23rd May 2012
About 9 years ago

I see little value in a Cap (or fixed rate) if it is only for two year, even if interest rates go up by 2% over that time the total cost will not be match.  Offer me a 5 or 10 year Cap and I would be interested.

Mark Alexander

16:00 PM, 23rd May 2012
About 9 years ago

I agree Ian. A good starting point for me would be a transparent rate for the term of the loan. I hate that fact that most lenders product revert to SVR which they can change at a whim regardless of what the market is doing. Base rates could stay at 0.5% forever but what's to stop lenders deciding to charge 10% if they decide to get out of BTL lending? Give me the transparency of a tracker any day, I don't trust these short term deals reverting to SVR's in the slightest. The lack of transparency in current mortgage pricing leads me to conspiracy theorise and that's not good.


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