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:
|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.
|Lenders Arrangement fee||£1,685||£1,999|
|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.