Buy to let mortgages are designed for those who wish to purchase a property, with the intention of letting it out to a tenant, usually on short hold tenancy agreements of either 6 or 12 months long, which can either be renewed or new tenants found over a number of years. Most buy to let properties are bought as long term investments rented out for a number of years, but in a smaller number of cases buy to let property may be a shorter term investment. In the case where the mortgage is likely to be paid off within a 5 year period it may be worth considering buy to let mortgages without early repayment charge (redemption penalties).
Unlike most buy to let mortgages, those without early repayment charges (redemption penalties) are designed to allow the property to be sold on quickly without penalty; sold on as a tenanted property; or sold without a shorter period of time as a buy to let property after a refurbishment or development work without receiving a financial penalty for paying the mortgage off early.
Redemption fees on buy to let mortgages do vary, but it is not uncommon for them to be around the 4% mark, so if you think this may affect you then using a buy to let mortgage without a redemption penalty (early repayment charge) can be a great way to save some cash.
Early repayment charges (redemption penalties) are usually the amount that a lender charges when the mortgage is repaid early, before the term which was initially arranged. It usually is highest the earlier that the mortgage is paid off. They are usually calculated by:
- The percentage of the original loan value
- The percentage of the balance still owing on the mortgage
- The percentage of the amount already repaid
- The number of months’ interest
Buy to Let Mortgages can be costly if you need to unexpectedly end them early, perhaps if you need to sell the property or you see a great investment elsewhere. A buy to let mortgage with no early repayment charges (redemption penalties) gives buyers an extra layer of reassurance should they not be 100% certain the property will be a long term investment. Being able to sell the property at any time without penalty could put the buyer at a great advantage financially. As this type of mortgage tips the balance in favour of the investor, not the lender. Whether you are looking for your first time buy to let mortgage, or you are a property portfolio owner, using a specialist buy to let mortgage broker highly experienced in the BTL sector we will be able to quickly and precisely find you the best value mortgage to match your requirements.
Along with the potential saving of up to 4 percent of the loan value, as with a typical buy to let mortgage, there is the added selling value of a tenanted BTL property. Should the owner be able to sell the property with a tenant in place, potential investors are likely to be encouraged by the prospect of taking on a property which has an established tenant – which saves the cost and hassle of finding a new tenant and vetting them, but it also means that they immediately receive a return on their investment.
As a product, buy to let mortgages with no redemption fee is relatively new on the market, so it is essential that you seek professional advice before taking out this kind of mortgage. Here at Ascot Mortgages we believe in giving you impartial advice, whatever your situation. If you are a buy to let investor we can use our knowledge and excellent reputation in the market to find you a bespoke mortgage offer, for the best price and quickly. We would encourage you to call and speak to one of our trained, friendly advisors who can discuss your requirements with you. Our guide, on buy to let mortgages with no early repayment charges (redemption penalties), is a good place to start.
Ascot Mortgages are an Independent “Whole of Market” UK Mortgage Broker. We are dedicated to providing the very best financial advice and the highest standards in customer service.
Please contact Ascot today, and you will be very glad you did.