First Sub-1% Buy-to-Let Mortgage Launched


October 2021
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First Sub-1% Buy-to-Let Mortgage Launched

Landlords can now benefit from the price war between mortgage lenders, with Nationwide’s the Mortgage Works launching the first sub-1% buy-to-let products.

Cash-flush lenders have been shattering records for owner-occupied mortgages since the summer, with Platform recently launching a previously unthought-of 0.79% two-year fix

The erosion of rates has pushed buy-to-let mortgages to new lows too, with headline-grabbing deals from Nationwide and Co-operative Bank’s Platform. But make sure you read the fine print because these mortgages don’t make financial sense for all property investors.

Nationwide Building Society’s buy-to-let arm The Mortgage Works is the first lender to shatter the 1% barrier. It’s offering a two-year fix at 0.99% to landlords with at least a 35% deposit.

Previously the best rate available to landlords was 1.16% from Barclays.

The catch with The Mortgage Works’ deal is a hefty fee, the equivalent of 2% of the loan amount. For example, a landlord purchasing a property for £300,000 would have to produce £3,900, before valuation fees. For comparison, the Barclays mortgage comes with a product fee of £1,549.

While product fees for buy-to-let mortgages are generally above those for homeowner loans, a 2% surcharge is very onerous. It makes The Mortgage Works’ product only sensible for those borrowing small sums. 

Those borrowing more should consider a product with a flat fee, such as a nearly-matching 1% offer from Platform, the buy-to-let arm of the Co-operative Bank.

The product fee with this two-year fix is £2,450. The catch here is that it’s only available on property purchases of between £350,001 and £500,000 and the buyer must have a household income or at least £60,000. They also can only have a buy-to-let portfolio of a maximum of three properties and will need a 40% deposit.

Both mortgages are available for both purchase and remortgage.

If you don’t meet the requirements for these bargain loans, don’t despair. Where Nationwide and Co-operative Bank have gone, other lenders are likely to follow.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "It was only a matter of time before the sub-1 per cent mortgage price war spilled over into buy-to-let but with lenders awash with cash and keen to lend, it is the logical next step. 

“Other lenders are likely to follow suit. There is a lot of appetite to lend and competing on rate or criteria are the main ways in which lenders can attract business.”