Best Buy To Let Mortgages

To overextend yourself can pay dividends under Buy To Let

3yr Fixed rate at 4.99% until 31/10/2009

No Arrangement Fee

Redemption Penalty extends beyond the 3yr Fixed rate BUT with only a 2% redemption penalty (redemption fee is a percentage of the amount redeemed)

The product is totally underrated. The Press maybe to blame by creating an ‘obsessive’ dislike of products with ‘extended tie ins’.

Whilst this product may have an ‘extended tie in’ it is actually beneficial to take this product and redeem within the redemption penalty period. I will highlight the assertion by comparing the product to the next best product that doesn’t have an extended tie in:-

3yr Fixed rate at 5.09% until 31/10/2009

1.5% Arrangement Fee (fee is a percentage of the mortgage advanced)

Redemption Penalty does not extend beyond the 3yr Fixed Rate

Buy To Let Calculation:-

Loan Amount £140,000

Option 3yr Fixed rate at 4.99% until 31/10/2009

Interest until 31/10/2009 (assuming 3yrs of interest)        £20,958

Redemption Penalty Interest if redeemed on 1/11/2009        £2,800

No Arrangement Fee        £0

Total Fees over three years        £23,758

Option 3yr Fixed rate at 5.09% until 31/10/2009

Interest until 31/10/2009(above assuming 3yrs of interest on the loan
AND arrangement fee)        £21698

Redemption Penalty Interest if redeemed on 1/11/2009        £0

Arrangement Fee        £2100

Total Fees over three years        £23,798

Assumptions used:-

The mortgage is redeemed on the day after the fixed rate ends.

The mortgage arranged was an interest only mortgage.

The mortgage is drawn on 31/10/2006.