Mortgages 

Kensington cuts rates and charges on BTL deals

Kensington Mortgages has made cuts to rates and product charges on buy-to-let mortgages for landlords with a 10 per cent and 20 per cent deposit.

The lender, which is part of The Northview Group, has lowered the completion fee on products carrying a percentage charge by 25 basis points, as well as reducing the cost of its fixed completion levy from £1,999 to £999.

At 70 per cent LTV, a two-year fix is now available from 3.74 per cent with a 2 per cent completion fee, or from 4.24 per cent with a £999 fee.

In addition, a buy-to-let loan fixed for the same period of time at 80 per cent LTV, has been discounted to 4.49 per cent with a 2 per cent competition levy, or from 4.99 per cent with a £999 fee.

The reversion rate is Libor – currently at 0.60 per cent- plus 4.30 percentage points.

In April, the lender doubled the maximum loan amount on first-time buyer purchases to £1m, up from the previous limit of £500,000, while the limit on buy-to-let mortgages was raised to £1.5m from £1m.

Provider view

Steve Griffiths, head of sales and distribution at Kensington, said: “We see opportunity in the buy- to-let market for mortgages up to 80 per cent LTV, particularly as we don’t require a minimum income for existing landlords. These changes are a significant move in making brokers sit up and look at Kensington again for their buy-to-let clients.

“The changes to our buy-to-let product range are all part of Kensington’s growth plans and we look forward to launching a number of further product developments in the near future.”

Adviser view

Dominic Basilea, director of Hertfordshire-based Aqua Wealth Management, said: “I would like to see the cost of buy-to-lets come down. 2 per cent can be quite expensive depending on the size of the mortgage. If you have a client that is looking for a buy-to-let loan, Kensington is probably not the first choice provider. However, they are good for clients who have credit problems for example, and are unable to meet the lending criteria of high street lenders.

“If you have to pay £2000 or £3000 for a buy-to-let mortgage, with rates as competitive as they are now it could be better to get a longer-term fix. You would know for sure what the monthly repayments would be over the fixed term.”

Charges

2 per cent on products carrying a percentage fee.

£999 on products with a fixed completion fee.

Verdict

Buy-to-let loans need to appear attractive to landlords who face the prospect of footing an inflated 3 per cent stamp duty on the purchase of another property. Here, the rates of interest and the completion fee are not particularly groundbreaking. There are five-year fixes currently available in the market place with rates nearer the 3 per cent mark, albeit at a lower LTV level.

What is more, the products that carry a percentage fee could prove extremely costly, potentially amounting to the tens of thousands for landlords seeking a mortgage at the top end of the lender’s maximum loan amount. These borrowers would benefit from the fixed levy option despite the higher rate of interest.

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