Buy-to-let  

Buy-to-let flat fees hit 12-month low

Buy-to-let flat fees hit 12-month low

Flat fees for buy-to-let (BTL) mortgages have reached a 12-month low after falling by more than 5 per cent in the second quarter of the year.

The average flat fee for BTL products is now £1,370 – down from £1,446 in quarter one, according to the latest data from independent broker Mortgages for Business.

The fall means landlords opting for this fee structure will save an average of £76 in fees on every mortgage they take out.

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Flat fees have declined in popularity in recent months, with increasing numbers of lenders offering percentage-based fees as a means of keeping interest rates low while allowing profits to scale with larger loans.

Percentage based fees now apply to 48 per cent of BTL mortgage products, having overtaken flat fees at the start of the year.

Steve Olejnik, chief operating officer of Mortgages for Business, said: “With interest rates still at exceptional lows, it’s all the more important to make sure you look at any additional charges when taking a buy-to-let mortgage. It is therefore promising to see a reduction in the average flat fee charged for mortgage products.”

Carl Shave, director at Suffolk-based The Mortgage Centres, said the reduction was good news for the BTL market.

“It is great that lenders are bringing them down,” he added. “I am a firm believer that it is choice that customers need, rather than a particular product type. There are circumstances where [flat fees] will be the right product for the right customer.

“A percentage-based deal would arguably work out very well for someone buying a relatively cheap property, but when you start to look at the London market, for example, a percentage would work out as a large sum of money.”

simon.allin@ft.com