For most professional landlords, the biggest cost they will face when investing in a property is the interest charged on the money they borrow to buy it.
Prior to the credit crunch, the Bank of England base rate varied from as low as 3.5 per cent in 2003 to as high as 6 per cent back in 2000, meaning that some standard variable mortgage rates reached levels of 7.6 per cent.
When interest rates crashed to just 0.5 per cent six years ago, the mortgage cost for many landlords who were on their lender’s Standard Variable Rate (SVR) fell to 4.8 per cent. This means that a £100,000 mortgage cost just £400 per month.
Now, with the ongoing mortgage rate war and the fact that many lenders remain keen to offer deals that are better than their SVR, many landlords will find themselves paying even less than before.
For example, some of the current deals have rates as low as 1.15 per cent, meaning that borrowing £100,000 could now cost you under £100 a month – £525 less than what it would have before interest rates fell.
Potentially, by carefully reviewing your finances, you could save £6,300 per year.
So, a crucial part of being a successful Buy-to-Let landlord isn’t just about buying a property at a great price and letting it legally. You need to keep a careful eye on your biggest cost – your mortgage finance.
And, because you could save thousands of pounds by regularly reviewing your finances, speaking to a mortgage broker who can search the whole of the market to find the finance deals which suit your needs on a regular basis is extremely important.
And, in addition to just finding the mortgage for you, that broker will also take the hassle of processing the mortgage application away from you. Considering the amount of time it can take some lenders to organise a mortgage offer, this can help save you extremely valuable time.
Developing a relationship with a good mortgage broker who understands Buy-to-Let will also help you to understand all of the different financing options available to you, whether you have just one extra property or a large portfolio.
To arrange a free initial consultation with our Mortgage Advice Bureau advisor contact us on 0161 925 3255.