Buy to let mortgage costs are hidden in the fees

Looking at the latest two-year fixed rate buy to let mortgages, it's not obvious that sometimes the cheapest rate is not the cheapest loan over the 24 months.

NatWest?s 2.65% fixed at 60% loan-to-value with a £1,995 arrangement fee is one of the cheapest rates and the cheapest deal out of the 10 selected for analysis.

The buy to let mortgage costs £9,945 over the 24 month term.

But a range of other fixed rate buy to let mortgages from other lenders over the same period do not fare so well.

Here?s the list sorted by interest rate ' low to high:

Lender

LTV

Rate

Monthly payment

Total cost

NatWest

60%

2.65%

£331.25

£    9,945.00

NatWest

75%

3.15%

£393.75

£  11,445.00

Virgin

60%

3.35%

£418.75

£  12,045.00

Skipton BS

70%

3.38%

£422.50

£  11,130.00

Post Office

60%

3.39%

£423.75

£  11,665.00

Coventry BS

75%

3.55%

£443.75

£  11,899.00

Virgin

70%

3.59%

£448.75

£  12,765.00

HSBC

65%

3.79%

£473.75

£  11,469.00

Skipton BS

70%

3.80%

£475.00

£  12,390.00

Halifax

75%

4.39%

£548.75

£  14,430.00

Here?s the same mortgages sorted by cost over 24 months, sorted low to high:

Lender LTV Rate

Monthly payment

Total cost

NatWest 60% 2.65%

£331.25

£    9,945.00

Skipton BS 70% 3.38%

£422.50

£  11,130.00

NatWest 75% 3.15%

£393.75

£  11,445.00

HSBC 65% 3.79%

£473.75

£  11,469.00

Post Office 60% 3.39%

£423.75

£  11,665.00

Coventry BS 75% 3.55%

£443.75

£  11,899.00

Virgin 60% 3.35%

£418.75

£  12,045.00

Skipton BS 70% 3.80%

£475.00

£  12,390.00

Virgin 70% 3.59%

£448.75

£  12,765.00

Halifax 75% 4.39%

£548.75

£  14,430.00

HSBC, with one of the highest interest rates, ranks much higher in the second table due to the low arrangement fee.

Landlords looking for buy to let mortgages should ignore the headline rates, and instead work out the interest over the term and then add in the various fees ' these are called booking fees, arrangement fees or product fees by different lenders.

The article Buy to let mortgage costs are hidden in the fees appeared first on LandlordZONE.

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Article courtesy of LandlordZONE

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