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22 May 2015

Reviewing financing could save landlords thousands

Author: Greg May

Greg MayFor most professional landlords, the biggest cost they will face when investing in a property is the interest charged on the money they borrow to buy it. With this in mind, Greg May, Director of Romans Mortgage Services, discusses how regularly reviewing finance could save you tens of thousands of pounds.

Prior to the credit crunch, the Bank of England bank rate varied from as low as 3.5% in 2003 to as high as 6% back in 2000, meaning that some standard variable mortgage rates reached levels of 7.6%.

When interest rates crashed to just 0.5% six years ago, the mortgage cost for many landlords who were on their lender’s Standard Variable Rate (SVR) fell to 4.8%. This means that a £100,000, interest only mortgage, cost just £400 per month.

Now, with the ongoing mortgage rate war and the fact that many lenders remain keen to offer deals that are better than their SVR, many landlords will find themselves paying even less than before.

For example, some of the current deals have rates as low as 1.15%, meaning that borrowing £100,000 could now cost you under £100 a month - £525 less than what it would have before interest rates fell.

Potentially, by carefully reviewing your finances, you could save £6,300 per year. So, a crucial part of being a successful buy-to-let landlord isn’t just about buying a property at a great price and letting it legally, you need to keep a careful eye on your biggest cost - your mortgage finance.

And, because you could save thousands of pounds by regularly reviewing your finances, speaking to a mortgage adviser who can search the whole of the market to find the finance deals which suit your needs on a regular basis is extremely important. 

In addition to just finding the mortgage for you, that adviser will also take the hassle of processing the mortgage application away from you. Considering the amount of time it can take some lenders to organise a mortgage offer, this can help save you extremely valuable time. 

Developing a relationship with a good mortgage adviser who understands buy-to-let will also help you to understand all of the different financing options available to you, whether you have just one extra property or a large portfolio.

For further about Romans Mortgage Services call 0118 3219 536, or visit:

You may have to pay an early repayment charge to your existing lender if you remortgage.

There is no guarantee that it will be possible to arrange continuous letting of the property, nor that rental income will be sufficient to meet the cost of the mortgage.

Your property may be repossessed if you do not keep up repayments on your mortgage.

There will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

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