Landlords are increasingly taking out two-year buy-to-let mortgages as uncertainty around Brexit continues.
That's according to data from Commercial Trust, which shows two-year deals now make up 39% of buy-to-let applications, up from just 26% last year.
Here, Which? explains why landlords are looking to fix their deals for shorter terms, and reveals the best buy-to-let mortgage rates currently available.
And now, new figures from specialist broker Commercial Trust show that landlords are taking a short-term approach when it comes to mortgage deals, with four in 10 opting for two-year deals in the first half of 2019. But why have two-year fixes seen such a jump in popularity?
In the residential market, borrowers are flocking to five-year fixes as they look to secure cheap rates during this time of economic uncertainty. But in the buy-to-let sector it appears the trend is moving in the opposite direction.
Andrew Turner of Commercial Trust says: 'Many landlords are looking to hedge their bets for the short term with a competitive, low-rate mortgage which will hopefully last beyond [Brexit] uncertainty, without locking them into a long-term agreement.
'Fixing for two years gives a landlord the opportunity to reassess the market much sooner and to consider remortgaging in two years' time, without necessarily incurring additional early-repayment charges.'
That said, buy-to-let mortgages come with many variables, and the deal you will be able to get will depend on the size of your portfolio and how much rent you're bringing in.
For example, the Barclays mortgage listed in the table below (1.42% initial rate) is available for landlords with up to 10 properties, while the Post Office product (1.48%) is only available to landlords with up to three properties.
If you want to know more about the deals below, visit the lenders' websites.
Best introductory remortgaging rates at 60% loan-to-value
Best introductory remortgaging rates at 75% loan-to-value
Source: Moneyfacts, 30 July 2019. *Maximum number of mortgaged properties in portfolio at time of application.
As you can see in the tables above, the top-rate tend to come with high initial fees of up to £1,995. And if you're only locking in a rate for two years, you could face another steep fee when applying for a new deal in 2021.
The good news is that the number of fee-free deals on the market has increased in the last year or two. These incentives come at a cost, however.
If you want a mortgage with no upfront fees, you'll pay a premium of around 0.5%-0.6% on the introductory rate.
At 60% LTV, the best two-year fee-free fix is priced at 1.91% (NatWest), while the best 75% rate is 2.24% (Platform).
Some lenders have begun to offer cashback on their buy-to-let deals, as they try to tempt landlords looking to remortgage. But is it possible to get a deal that is both fee-free and comes with cashback?
At 60%, both Santander (2.04%) and Sainsbury's (2.11%) offer fee-free deals that come with £250 cashback for people remortgaging.
The highest amount of cashback on a fee-free deal is £500 from Barclays, though the mortgage has an initial rate of 2.21%.
At 75%, Sainsbury's (2.26%) offers the best fee-free rate with cashback, although this is only available on mortgages on new purchases, rather than remortgaging.
Landlords who are remortgaging can get £250 cashback from Santander, albeit with an initial rate of 2.29%.