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Best buy-to-let mortgage rates for landlords revealed

Is your fixed-rate buy-to-let mortgage deal coming to an end?

It’s almost two years since a flood of prospective landlords snapped up rental properties before the buy-to-let stamp duty hike came into force – and for many, their initial rate is about to expire.

In November 2015, then-Chancellor George Osborne announced plans to charge an extra 3% on each tier of stamp duty for buy-to-let properties and second homes costing more than £40,000. This led to a flood of investors rushing to complete on buy-to-let property purchases before the changes came into force the following April.

If you were one of those investors and your two-year introductory rate is coming to an end, we’ve scoured the market to bring you the best buy-to-let mortgages currently available.

Buy-to-let mortgages: best two-year fixed rates

The following deals are based on a £165,000 property, borrowing £125,000 over 25 years.

Click the links to find out more about each deal with Which? Money Compare.

Lender Initial rate Reverts to APRC Initial monthly payment Max LTV Total cost over deal
Virgin Money 1.75% 4.99% 4.61% £515 75% £14,349
Skipton Building Society 1.78% 4.94% 4.54% £517 75% £13,417
Platform 1.79% 4.74% 4.41% £517 75% £14,425
TSB 1.79% 4.84% 4.52% £517 75% £14,441
Virgin Money 1.79% 4.99% 4.62% £517 75% £14,406

Data sourced from Which? Money Compare 07/03/2018

Buy-to-let mortgages: best five-year fixed rates

According to Moneyfacts, the average interest rate for a five-year fixed-rate buy-to-let mortgage is currently 3.43%.

A rate this low has only ever been recorded once before, in October 2017, so taking out a five-year deal now could be a savvy move – especially with a potential base rate rise on the horizon.

The deals below are based on the same scenario as the two-year deals listed above (a £165,000 property, borrowing £125,000 over 25 years).

Lender Initial rate Reverts to APRC Initial monthly payment Max LTV Total cost over deal
Skipton Building Society 2.56% 4.94% 4.2% £565 75% £34,893
Skipton Building Society 2.62% 4.94% 4.21% £568 75% £35,121
Virgin Money 2.64% 4.99% 4.29% £570 75% £36,172
Godiva Mortgages (part of Coventry Building Society) 2.65% 4.74% 4.08% £570 75% £36,223
Barclays 2.69% 4.99% 4.38% £573 75% £36,353

Data sourced from Which? Money Compare 07/03/2018

Is now a good time to take out a fixed-rate mortgage?

In February, we reported that mortgage interest rates may start to increase due to the end of the Term Funding Scheme (TFS).

Many market analysts are predicting a base rate rise in May, which is also likely to have a knock-on effect on mortgage rates.

This means that now could be a good time to take out a fixed-rate mortgage and lock in a low rate before interest charges creep up.

What to bear in mind when remortgaging

With any mortgage, it’s worth regularly checking whether you’re on the best deal for your circumstances. This is particularly true if you’re on a fixed-rate deal and the introductory interest rate is coming to an end. For most deals, you’ll revert to the lenders’ standard variable rate – meaning the amount you’re paying will usually jump significantly.

However, you should always weigh up the total cost of remortgaging before signing on the dotted line.

Most mortgages carry early repayment charges – often over £1,000 – which you’ll have to pay if you exit the deal before the full mortgage term.

Many mortgages also carry fees that you pay when applying. The total cost of these charges may mean that a small drop in interest rate isn’t worth switching for.

  • For expert help in working out the best option for you call Which? Mortgage Advisers, our independent broker service, on 0800 197 8461

All change in the buy-to-let sector

A number of things are changing for landlords this year.

From April, newly bought rental properties will need to have an energy efficiency rating of E or above. By 2020 this rule will have been extended to cover all existing rental properties.

April will also see the amount of tax relief that landlords can claim on their mortgage interest drop from 75% to 50%.

It’s likely that lettings fees will be banned this year, and landlords will soon have to register with an ombudsman scheme.

For a full rundown of the changes that might affect you this year, check out our story on the 12 things buy-to-let landlords need to know in 2018.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

Categories: Money, Mortgages & property, Uncategorised

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