Landlords switching to competitive fixed rate buy-to-let mortgages could find the savings they make wiped out by hefty product fees, according to Property Master.
The online broker’s Mortgage Tracker report has been compiled every month since January 2018, but this is the first month it has calculated average product fees. The research shows these can range from a one-off charge of £621 up to £1,212.
According to Property Master, the average product fee for a two-year fixed rate mortgage for a typical amount of £150,000 at 75 per cent loan-to-value was £621. This fee rose to £1,065 if 50 per cent of the value of the property was being borrowed.
The average product fee for a five-year fixed rate mortgage for the same amount at 75 per cent LTV was £745, but jumped to £1,212 at a LTV of 50 per cent.
The Property Master Mortgage Tracker follows a range of buy-to-let mortgages for an interest only loan of £150,000. This month’s figures were calculated on deals available on 1 December.
Property Master chief executive Angus Stewart says: “Understandably landlords will be attracted to the headline rates lenders quote but it is important also to factor in additional costs, in particular product fees. Landlords may also find other fees going under other names such as an application fee, or a booking fee or an account fee. When shopping around landlords need to make sure they have the full facts and the total cost in front of them.”
“With further rate rises on the horizon landlords coupled with a range of increased regulator and tax costs, landlords are becoming more aware than ever of the need to watch their finances. There are certainly good deals out there but make sure you know the all the costs involved before signing a new finance deal.”