Large fees can make competitively priced buy to let mortgages less attractive

Landlords attracted to keenly priced fixed rate buy to let mortgages could find the gains they make wiped out by hefty product fees, according to new research.

The study from online mortgage broker Property Master shows that these can range from a one off charge of £621 up to £1,212.

While the average product fee for a two year fixed rate mortgage for a typical amount of £150,000 when the landlord was borrowing 75% of the value of the property was £621. This fee rose to £1,065 if 50% of the value of the property was being borrowed.

The average product fee for a five year fixed rate mortgage for the same amount when 75% was being borrowed was £745 but jumped to £1,212 if 50% of the value of the property was being borrowed.

The Property Master Mortgage Tracker follows a range of buy to let mortgages for an interest only loan of £150,000. Deals from 18 of some of the biggest lenders in the buy to let market including Barclays, BM Solutions, RBS, The Mortgage Works, Godiva and Precise.

‘Understandably landlords will be attracted to the headline rates lenders quote but it is important also to factor in additional costs, in particular product fees,’ said Angus Stewart, Property Master’s chief executive.

‘Landlords may also find other fees going under other names such as an application fee, or a booking fee or an account fee. When shopping around landlords need to make sure they have the full facts and the total cost in front of them,’ he explained.

He pointed out that with further rate rises on the horizon next year, coupled with a range of increased regulator and tax costs, landlords are becoming more aware than ever of the need to watch their finances. ‘There are certainly good deals out there but make sure you know the all the costs involved before signing a new finance deal,’ he added.