Buy to Let Remortgage

I had a customer looking to remortgage an existing buy to let who I found a better solution for.

I managed to save the client £7,900 over 5 years and here is how…

The clients approached me to remortgage their existing buy to let property as their current deal i.e. the fixed interest rate term was coming to an end and they were going to go onto standard variable rate.

They already had a quote on the table from elsewhere which was 4.49% fixed for the next 5 years.

The quote had a property value of £145,000 and they require a mortgage of £110,000.  The first calculation I did was to check the loan to value which is 75.8%.

Majority of the whole buy to let market opens up below 75% of the property value i.e. having 25% equity (or deposit if purchasing).

I had lengthy discussions with the clients and provided a more suitable alternative.

75% of £145,000 = £108,750.

Reducing the mortgage by £1,250 gave them a significantly lower interest rate over the 5 years and because it is a remortgage a lot of mortgage lenders offer free mortgage valuation and free solicitors.

Here is the deal on the table that I presented:

Existing Quote Gary
Interest Rate 4.49% 3.19% Fixed
Deal 60 months fixed rate 60 months fixed rate
Early Repayment penalty 4.00% of the amount repaid during the first 24 months.

3.00% of the amount repaid during the following 24 months.

£111,685.00 2.00% of the amount repaid during the following 12 months.

5% of the outstanding loan up to 31 October 2018.

3% of the outstanding loan up to 31 October 2020.

1% of the outstanding loan up to 31 October 2022.

APRC 4.6% 4.13%
Mortgage Amount £110,000 £108,750
Lenders Arrangement fee £1,685 £1,999
Valuation fee £410 £0
Legal Fees £500 £0
Broker £995 £1,100
60 Months payments £25,073 £17,664
5 year Cost £138,663 £129,513

 

As you can see after reducing the mortgage by £1,250, I saved the clients £7,900 over 60 months fixed rate.

My goal is to always offer solutions to problems and look at every angle and present options.

Make sure you check the loan to value of your mortgage and ask how it could affect your interest rate.

  • This blog does not constitute advice, it is for information purposes only.
    • You should contact a mortgage broker for personalised advice for your specific circumstances.  Please ask us for a personalised illustration.
  • We charge a fee of up to 2% of the amount borrowed.  Up to £995.00 is payable on application and the rest is payable on offer of the mortgage.
  • Active Brokers Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (http://www.fca.org.uk/register) under reference 488342.
  • Your home may be repossessed if you do not keep up repayments on your mortgage.
  • The mortgage industry does change over time but everything I have said is correct as of 13/03/2017
  • The Financial Conduct Authority do not regulate Business Buy to Let Mortgages.

 

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