Switch and Fix on Buy to Let!

More movement in the mortgage market this week as yet more lenders have decreased rates and a pricing war seems to be unfolding in the longer term fixed rate offerings. One lender, Accord Mortgages, have reduced their 5 year fixed rate to just 3.84%, available to 75% of the property value and with a lender fee of just £995. They have also reduced their 2 year fixed to 2.79%, also with a £995 fee.

Loans of 90% of the property value and over also seem to have been targeted this week as lenders seek to assist those with small deposits. The rates are reasonably priced, but as more and more lenders re-enter this arena, with sensible lending, the rates will decrease. One example is Kensington Mortgages, funded by Investec, who offer First Time Buyers a 2 year fixed rate at 5.99% with a £699 fee and a free valuation, with a 10% deposit required. For home movers, the rate is 5.79% with a £999 fee. The benefit with Kensington is they do not credit score, compared to many others. Certainly an area to keep an eye on over the coming weeks.

The Buy to Let (BTL) market has also seen huge changes as Natwest cut some rates by 1.4%, Mortgage Trust (part of Paragon group) launch 18 new BTL products, some starting from sub 4% and The Mortgage Works (part of Nationwide) launch a 2.99% tracker and allow ‘switch to fix’ on all of their Buy to Let trackers.

The Switch to Fix option is now available on both Residential and Buy to Let mortgages via certain providers. It is a great product offering allowing you to have the best of both worlds. Take a low base rate tracker and enjoy the Bank of England base rate whilst low, and when you feel you want to fix your monthly payments for a medium to longer term, transfer to a fixed rate with the same lender. Sounds great, but just beware that the lender may charge a product fee for the fixed rate and of course, you will only have access to those fixed rates available at the time of the switch. Terms and conditions apply!

Lender re-enters the market!

Good news this week! One lender who stepped back from new business lending back in February 2008 is lending again. Paragon Mortgages were renowned specialists in the buy to let arena with professional landlords, houses of multiple occupancy and properties in limited company names. Their re-emergence in the market is positive news, especially for landlords with an established portfolio of properties. Paragon offer a non credit scoring approach to prudent lending, design their products to attract experienced landlords and, even better news, they are initially launching through a limited panel of distributors including AToM.

In the residential market, remortgage applications appear to be on the increase. Borrowers tend to be looking to secure long term fixed rates. Others are releasing equity to acquire Buy to Let properties in the current cheaper climate or releasing funds to help siblings step on to the increasingly tough property ladder. Whatever the reason, make sure you do your homework. As we move in to the final quarter of the year, some lenders will be looking to end the year on a high and attract volume business. There are some great rates available to cater for all requirements, whether you require a fixed rate, tracker/discounted, or a capped rate, etc.

I’ve said this before, but it needs constant review. If you have plans to apply for a mortgage in the not too distant future, keep your eye on your credit. Don’t miss or make late payments to any provider. All financial institutions will base their decision initially on your credit history. If you have missed or late payments, or even a lot of recent searches (from multiple finance/mobile/car/home insurance applications), this could be detrimental to your ability to obtain finance, at a competitive rate. If you have not reviewed your credit search before, get it for free (30day trial period) from Credit Expert (see www.atomltd.co.uk for a link). It’s well worth a review and a good insight on how attractive you may, or may not, look to a lender.