Coventry for intermediaries has launched a new range of buy-to-let mortgages for landlords with a 50 per cent deposit.
The range includes a two-year fix at 1.49 per cent, and a five-year fix at 2.59 per cent – both with a £1,999 product fee. The early repayment charges on the two-year fixed products is 2 per cent until the end of April 2018, then 1 per cent until the end of April 2019.
The ERCs for five-year fixes are 5 per cent until the end of October 2018, 3 per cent until the same date in 2020 and 1 per cent in 2022. The lender also offers a variable rate deal under the Flexx for Term banner to 50 per cent loan to value (LTV) at 1.59 per cent, and no ERCs with a £1,999 product fee.
In March, the lender unveiled a range of variable rate residential mortgages for borrowers with a 35 per cent deposit while discounting its existing products. Highlights of the suite include a Flexx for Term loan priced at 1.35 per cent to 65 per cent LTV with no early repayment charges and a £999 product fee.
Coventry for intermediaries also recently celebrated the 10th anniversary of its pledges to intermediaries.
Provider view
Kevin Purvey, director of intermediaries, said: “We’re very pleased to launch a new range of buy-to-let mortgages at 50 per cent LTV. As well as competitive rates, the range means that brokers can offer their buy-to-let clients the stability of a fixed rate for two, five or 10 years, or the flexibility of our Flexx for Term products with unlimited overpayments and further borrowing at the same rate. Also, all of our products are application fee-free and include a valuation of up to £700 for buy-to-let mortgages”.
Adviser view
Commenting on the two-year fix product, Dominic Basilea, director at St Albans based Aqua Wealth Management, said: “The rate is good, but the product fee is too high on a two-year fix. Time flies and I’m not sure if many clients would have the appetite to pay another product fee to remortgage after paying £2,000 two years earlier. I suppose a lot of it comes down individual circumstances and the size of the loan.
Mr Basilea added: “Given the changes in the buy-to-let space, specifically the changes to the buy-to-let tax relief, I have been telling my clients to seek tax advice because we are not tax experts. It is important for clients to look at buy-to-let as a way as generating income, and for tax planning purposes.”
Charges
A £1,999 fee applies to products in the range.
Verdict
Individuals who are able to stump up a substantial amount of money for a deposit are far more likely to benefit from lower interest rates on their mortgages. Here, fixes are competitive – akin to the rate of interest on conventional residential mortgage at a higher LTV level. However, raising a 50 per cent deposit is by no means an easy feat – especially for borrowers seeking to buy a property to rent in the south east.
The product levy is at the top end of the scale. However, while the £1,999 product fee would not be considered peanuts, the levy is likely to be more palatable for those seeking to borrow a large amount compared to those who are seeking to secure a small sum.
