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Availability of cheap buy-to-let mortgages soars

Hundreds of five-year deals offer rates below 5%

red for rent sign outside house

Would-be landlords are more spoilt for choice than ever before, as banks continue to cut buy-to-let mortgage rates and boost the number of cheap deals.

In the past two years, rates for fixed buy-to-let deals have fallen from 4.45% to 3.87% on average, according to data provider Moneyfacts.

Moneyfacts data suggests that the number of five-year deals with rates below 5% is at its highest ever level – there were 143 such deals on offer in May, up from 55 last year.

Find out more: Buy-to-let mortgages – learn how to get the best deal

Buy-to-let mortgage price war

The best rate available for a five-year fixed deal is from Santander, formerly known as Abbey – at 3.29% (APR 4.6%) with a fee of 2.5% of the amount borrowed, although it is only available through intermediaries.

According to the Which? Money Compare tables, the best deal available direct from a provider for a five-year fixed-rate buy-to-let mortgage is from NatWest, which offers 3.99% (4.4% APR) with a £1,995 arrangement fee.

NatWest also offers a two-year fixed deal at 2.24% (APR 4.5%) for those with a 40% deposit or 2.49% (APR 4.3%), for those with a 25% deposit. Both mortgages come with a £1,995 arrangement fee.

Demand for buy-to-let mortgages expected to soar further

Interest in buy-to-let is expected to soar thanks to pension reforms that allow over-55s to access more of their savings.

Most lenders, however, impose age limits on lending – some as low as 65 when the mortgage deal ends.

If you’re interested in using pension funds to invest in buy to let, see our guide on withdrawing a lump from your pension.

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