Now is time for low cost five-year fixed buy to let mortgages

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How to get started with buy to let mortgages

There are many cheap five-year fixed rate deals available on commercial mortgages for buy to let landlords. With high competition among lenders, many are competing by offering low interest rate mortgages.

A few years ago, when interest rates were high, there was a reluctance to opt for fixed rate commercial mortgages, in case interest rates fell. After the Bank of England raised their base rate in November 2017, many financial experts predicted that this was the first of many small interest rate rises over the next year or two. If the Bank of England interest rate does rise, then this will not affect a landlord who already has a fixed rate mortgage.

Two and three-year fixed rate mortgages are available, and these can often be cheaper than five-year mortgages. After the two or three-year period, the interest rate is likely to rise which can make the total interest paid over a five-year period similar to a five-year fixed rate mortgage.

Lenders’ stress tests are based on how much the rental income exceeds mortgage repayments. Many lenders are more generous when assessing five-year mortgages and require less rental income to qualify for a mortgage.

A five-year mortgage means that it is easier to calculate profit margins as mortgage repayments are constant during the loan period. Mortgage brokers can source the best fixed rate mortgage deals for landlords.

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