Online mortgage broker and comparison website Property Master warns that a landlord’s gains from “shopping around” can be completely wiped out because of arrangement fees.
Landlords attracted to keenly-priced fixed rate buy-to-let mortgages could find the gains they make wiped out by hefty product fees, according to research out today from online mortgage broker, Property Master, the digital start up that uses algorithms to match the requirements of individual private landlords against the entire buy-to-let mortgage market.
The online broker’s Mortgage Tracker report has been compiled every month since January of this year, but this is the first time the broker has broken out average product fees. The research shows these can range from a one-off charge of £621 up to £1,212.
According to Property Master’s Mortgage Tracker research the average product fee for a two-year fixed rate mortgage for a typical amount of £150,000 when the landlord was borrowing 75% of the value of the property was £621. This fee rose to £1,065 if 50% of the value of the property was being borrowed.
The average product fee for a five-year fixed rate mortgage for the same amount when 75% was being borrowed was £745 but jumped to £1,212 if 50% of the value of the property was being borrowed.
The Property Master Mortgage Tracker follows a range of buy-to-let mortgages for an interest only loan of £150,000. Deals from 18 of some of the biggest lenders in the buy-to-let market including Barclays, BM Solutions, RBS, The Mortgage Works, Godiva and Precise (full list below) were tracked. Figures for this month’s Mortgage Tracker were calculated on deals available on December 1st.
Angus Stewart, Property Master’s Chief Executive, said: “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.”
He continued: “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.”
Property Master was launched 18 months ago and aims to shake up the buy-to-let mortgage market currently served by around 12,000 mortgage brokers. It has already attracted financial backing from a broad range of private investors including a minority stake being taken by LSL Property Services, whose estate and letting agency brands include Your Move and Reeds Rains.
Property Master has automated what was a manual, complex process to provide landlords with a free easy to use mortgage search tool which provides a mortgage quote that is pre-screened against each lender’s specific and changing criteria.
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