Buy to Let Mortgages – How To Compare The Best Buy To Let Deals

With the private rental property market flourishing as it is, more and more financial institutions are launching their own ranges of buy to let mortgages. This competition can only mean good things for property investors, but with the vast majority of buy to let mortgages looking very similar how do you choose between them?

Compare the obvious

Probably the most obvious thing to compare when it comes to buy to let mortgages is the interest rate. A lot of lenders offer discounted interest rates for the first few years and while this is very tempting you need to look at the standard interest rate you’ll be paying after the discounted period ends. You might also want to check if a lender will bring their interest rate down slightly in return for a bigger deposit (if you have a large sum of cash ready to invest).

Leading on from this, another obvious thing to look at when it comes to buy to let mortgages is the deposit required. Most providers of buy to let mortgages specify no less than 25%, which on a moderately sized £200,000 property works out to £50,000 not including fees – a good chunk of money in anyone’s book. Some buy to let mortgage providers however occasionally lower this to 20% if you can prove your personal income is in excess of £40-45,000 per annum.

Look at the small print

The small print of buy to let mortgages is just as important as the interest rates and deposit levels. Within the small print you’ll find information about arrangement fees (which can be as high as £3000), late payment fees, early redemption penalties (in case you decide buy to let isn’t the business for you), and other important things to consider.

Buy to let mortgages with discounted interest rates can look like a very attractive option but additional costs that are only specified in the small print can make them just as expensive as any other buy to let mortgage. Any additional costs and fees have to be disclosed by law and they are…just very carefully and in small writing right at the back of the application form.

 Making a choice

When you come to choose which buy to let mortgage lender to apply to you need to weigh up the cost of the interest rates, the deposit amounts and the additional costs and fees. If you need help it is often worth working through a broker, not least because they can sometimes find buy to let mortgages that aren’t available on the open market.

Don’t expect to find a mortgage with low interest rates, small deposit requirements and cheap fees – they simply don’t exist. Better to find a range of affordable buy to let mortgages before asking a professional mortgage advisor for their opinion on which would suit your circumstances best.