Fixed Rates - How Long Should You Fix Your BTL Mortgage For?
Posted on 21st June 2023 at 17:01
If you are looking at a fixed rate mortgage, depending on what you think interest rates will do over the next few years, your considered thoughts will determine whether you fix your mortgage in for 2, 3 or 5 years.
With the current turbulence of the mortgage market, especially over the last 12 months, landlords have been faced with the challenge of increased interest rates and in turn, this is impacting on affordability with the lenders.
If you are unsure how long to fix for, we can provide you with access to BTL lenders who are offering a 5 year fixed rate with no ERC’s after 3 years. (correct at time of publishing)
The advantage of this strategy is that the mortgage product is stress tested at the 5 year rate rather than 2 years (currently 2 year rates are higher) allowing you to maximise your mortgage amount and helping you to achieve a remortgage at your current level where some lenders are not even offering you as much as that, at this time.
If interest rates go down, you can exit the mortgage at the 3 years point with no penalty.
If interest rates go up, you can stay fixed in for the full 5 year term.
This gives you the flexibility to move rate if interest rates start to decrease in 36 months time.
An example from one of the lenders who offer this product:
• Stress tested at pay rate
• Max LTV 75%
• Fees range from 2% to 5% OR they can offer a fixed fee at £1,999
• Min loan £30k
• Max loan £1m
• Standard property – not available for HMO/MUB
*Subject to normal underwriting and criteria checks
In a time where flexibility is key, call me for a chat to discuss your options.
Victoria Bennett CeMap
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