The new ‘Let-to-Buy’ products will be provided by TMW, a subsidiary of Nationwide, and the residential mortgage for the new home will be provided by the society.
A customer remortgaging his current home as a Buy-to-Let with TMW and completing his new residential mortgage through Nationwide will be given £250 as a loyalty cashback.
The key TMW Let-to-Buy products available to customers completing the residential purchase through Nationwide at 65 per cent loan-to-value includes two- and five-year fixes at 2.99 per cent and 3.99 per cent respectively, with a £995 product fee.
At 75 per cent LTV, two-year fixes are available at 4.09 per cent, while the interest rate for five-year fixes is 4.49 per cent – both with a £995 product fee.
The proposition is solely available through intermediaries and the residential mortgage application with Nationwide will only be considered as part of a Let-to-Buy transaction.
Customers will be able to apply for a new residential mortgage with Nationwide of up to 85 per cent LTV, and all TMW Let-to-Buy mortgage customers will receive a free standard valuation.
Reactions
Provider view
The Nationwide’s head of specialist lending Paul Wootton said: “Nationwide is taking a joined-up approach to helping home-movers turn their existing homes into Buy-to-Lets, while purchasing new homes in which to live. We are making it easier for our customers to complete the process of securing two different types of home loan at the same time, helping those who may wish to live elsewhere but want to turn their existing property into an investment opportunity.
“Customers who complete both transactions through the Nationwide Group will receive £250 cashback as a loyalty reward. This could help with added legal fees that can be associated with completing two mortgages at once.”
Adviser view
Fife-based independent financial adviser Wendy Cochran said: “There is a reasonable appetite for people wanting to retain their current homes as Buy-to-Lets. But often it does not make that much sense. If they were going to go out and look for a good rental prospect they would rarely arrive at their current houses. But there is an obvious convenience factor in not having to sell.
“I don’t think the Nationwide deal will attract that much interest. I would always advise a client to have a ‘whole of market’ look at both their new mortgage and their Buy-to-Let/Let-to-Buy requirement. I would be surprised if Nationwide ‘ticked the box’ for both mortgages.”
Charges
£995 product fee
Verdict
A financial sweetener to entice borrowers to remortgage their homes as Buy-to-Lets and secure residential mortgages could entice customers who are looking to secure both types of mortgage without an intermediary.
However, it is to be expected that a large number of intermediaries will share the view expressed by Ms Cochran. Independent intermediaries often take a holistic approach when it comes to scouting for products.
The rates offered by Nationwide for Let-to-Buy customers completing the residential purchase are competitive but not market-leading.
There are bound to be more competitive individual Buy-to-Let and residential mortgage deals that, when put together, work out cheaper than this ‘combi’ product.
