Choosing the right property investment mortgage is not easy with almost 500 different products from dozens of lenders on the market.
According to the latest figures, 484 mortgages are available – and the difference between most of them is just a fraction of a per cent on interest rates.
So here’s a checklist of some points to consider when looking for a landlord loan:
- Ignore the headline interest rate – it’s designed as a hook and bears no relation to the overall price.
- Calculate the actual payments over the incentive term to compare like with like – for instance, if you are comparing three-year fixed rates, work out the interest only payment, cost of fees and charges to the lender and divide by 36 months to arrive at the true mortgage figure
- Don’t ignore fees and deposits, they are a crucial part of the cost of the loan
- If you are working with a broker, try to negotiate the costs down – if not go elsewhere because the market is flooded with brokers looking for business
- Do not take mortgage advice directly from a bank or building society. They can only discuss their own products and will not point you at a cheaper option sold by another lender
In most cases, lenders are looking to cherry-pick who they regard as the best property investment mortgage borrowers. These are landlords with the most equity, best credit histories and quality properties.
Few property investors fall into that bracket and will find lenders offer them higher interest rate deals.
In the end, despite the huge range of property investment mortgages on offer, the choice will come down to two or three different loans.
Don’t forget, the marketing is designed to confuse and stop direct mortgage comparison, so do not make instant decisions and work the cheapest deal with our calculation strategy.