9:44 AM, 11th December 2023, About 2 years ago 4
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Hi, The mortgage lenders have got creative with BTL deals of late. Higher fees for lower rates, but this bit of creativity is a bit well, err, bonkers!
So, here is the deal for new customers:
2 Year Tracker, 3% Product Fee, 5.49% Interest Rate, 75% LTV
And for existing customers on a product transfer:
2 Year Tracker, 3% Product Fee, 6.29% Interest Rate
Notice anything? Well done if you spotted that there is no LTV requirement, I hadn’t missed it off by accident. I also checked with them and it’s 100% real.
It seems that removing an LTV requirement has a cost of 0.8% on the interest rate.
I find this incredibly odd, particularly as the likelihood of being over 75% on a product transfer is low.
Is this a one off? Is this a sign of things to come? Has anyone else seen this kind of deal?
Thank you,
Mark
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Easy rider
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Member Since September 2023 - Comments: 173
10:27 AM, 11th December 2023, About 2 years ago
Just like the government, mortgage lenders have a vested interest in avoiding mass repossessions. They need landlords to be able to refinance.
With property prices expected to fall considerably (Bank of England says banks could cope with a 30% reduction in house prices), interest rates not forecast to fall significantly, lenders need to get creative. This is just the tip of the iceberg in my opinion.
Dylan Morris
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Member Since August 2016 - Comments: 1179
11:42 AM, 11th December 2023, About 2 years ago
Makes sense the lender already has the mortgage on the property and there’s nothing they can do about the high ltv, so why not collect a 3% product fee from your existing borrower.I wonder what the tracker rate is ?
Dylan Morris
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Member Since August 2016 - Comments: 1179
11:50 AM, 11th December 2023, About 2 years ago
Sorry just noticed the rate is quoted in the article.
JaSam
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Member Since March 2022 - Comments: 135
14:53 PM, 11th December 2023, About 2 years ago
My guess is that it will stop highly geared landlords getting washed out but it will trap them to that lender as they won’t be able to switch if >75%. They will simply add the fees to the loan and pay the extra interest charges. So as long as the rent covers the charges they might survive but expect any profit and equity to be wiped out! I would sell up rather that get trapped especially avoid a 2 year tracker as in another 2 years its yet more fees. 5 year fix would be safter if you want to try and ride out the storm. Highly geared with low ROI are in trouble if renewals is due within the next 2 years.