In a bid to provide better value to property investors, Fleet Mortgages has announced a significant reduction in its rates for five-year fixed buy-to-let mortgage products.
Rate Reductions Across the Board
As of the 8th of November, Fleet Mortgages has cut its interest rates by 20 basis points (0.20%) on all of its five-year fixed-rate mortgage products. This is a broad change that applies to several different mortgage plans:
- For Standard and Limited Company Borrowers:
- The five-year fixed-rate at 70% loan-to-value (LTV) has been reduced to 5.14%.
- For a slightly higher LTV of 75%, the rate is now 5.54%.
- Green Mortgage Initiative:
- A specialized five-year fixed-rate plan for properties with an Energy Performance Certificate (EPC) rating between A-C has been cut to 5.44%, which is available up to 75% LTV.
Understanding the Fees and Interest Coverage Ratio
Mortgage fees are also a crucial part of the equation. The five-year fixed product at 70% LTV comes with a 5% fee. Other five-year mortgage options carry a 3% fee. It’s important to consider these fees when calculating the total cost of your mortgage.
All the products feature an interest coverage ratio (ICR), which is the amount of rental income you need over your mortgage payments, based on the product’s pay rate. This is calculated at 125% for basic-rate taxpayers and 145% for higher-rate taxpayers.
A Strategic Move for More Competitive Pricing
Steve Cox, Fleet Mortgages’ Chief Commercial Officer, explained that the more predictable interest rate environment has allowed for these strategic rate reductions. Following the Bank of England’s decision to maintain the Bank Base Rate, the easing of swap rates has given Fleet Mortgages the flexibility to adjust their pricing.
Benefits for Landlords and Buy to Let Investors
Fleet Mortgages is known for focusing on buy to let mortgages. To incentivize landlords to improve the energy efficiency of their properties, Fleet Mortgages is offering a £1,000 cashback payment for those who upgrade their property’s EPC to a C rating or above during the initial fixed-rate period.
The lender also touts efficient service levels, with a 48-hour assessment window for documents and valuations, and a 24-hour turnaround for Decision in Principle (DIP) reviews.