Providing landlord clients with the best of both worlds – especially in this economic environment – can be very tricky.
They might want to know exactly what their monthly mortgage payments are for the next three to five years, but they’re also likely to want a degree of flexibility with that, just in case their circumstances change.
After all, we know that the housing market can differ greatly from one year to the next, and while many might fear the post-Brexit landscape, it’s truly impossible to say how this will all play out, how the mortgage market might be impacted and what that will mean for rates, appetite to lend, criteria, tenant demand, house prices, you name it.
Given that uncertainty, it’s not surprising that landlords are increasingly opting for longer-term, fixed-rate deals, often of the five-year variety. But, are they completely happy with being fixed in for such a lengthy period, especially knowing that – should they need to remortgage or sell – they are likely to have to pay the early repayment charges (ERCs) that come with such products.
Having talked to intermediary partners, we know it’s a major factor in the recommendations and the product decisions advisers make. Which is why we wanted to deliver a product which could provide the price certainty landlords are looking for – namely fixed monthly mortgage payments over a considerable period – coupled with a large degree of flexibility should they want, or need, to review their options in the future.
Our new ‘Fix to Flex’ buy-to-let mortgage offers both to landlords – we have a five-year fixed rate (3.45% for 65% LTV, 3.74% for 75% LTV), but our ERCs only run for the first three years of that deal (5%, 4%, 3% respectively). After this, the landlord borrower is free to remortgage without penalty, giving them not only peace of mind on rate but also options in the future should they need to exit the deal. We can underwrite the case as a five-year fix (assessing on pay rate) but give that freedom to move in three years’ time.
It’s available for individuals, those purchasing or refinancing through a limited company, first-time landlords or those who classify as the portfolio landlord, and it gives both a long-term solution and a shorter-term option, should the requirement arise.
Having spoken to our intermediary partners we’re of the opinion that there is significant demand for such a product, especially given the current economic and political environment, which let’s be frank, is anything but certain.
Opting for the ‘Fix to Flex’ delivers certainty in spades with the added benefit of flexibility. We would urge advisers to talk to our sales representatives to see how such a product can be a valuable part of your buy-to-let product toolkit.
