Reasons to consider 3 year fixed rate buy to let mortgages
The rental market is still gaining strength and due to the ever increasing age of first time buyers it is unlikely to drop off any time soon as more people are forced to live in rental accommodation for longer. Therefore getting into the rental market is still an attractive option. When you start looking at potential mortgage products you will find that there are lots of different products available, each one with its own selling points. Figuring out which one is best for you can be a tough process, but if you prepare you will find it much easier.
Why a 3 year fixed rate?
Normally picking a three year fixed rate mortgage can be a bit of a gamble as you can’t be sure whether interest rates will go up or down. With the Bank of England base rate being at its lowest possible value then you can be sure that it won’t drop any lower, however there is the possibility of it rising. It has now been at its current value since 2008 and with the economy beginning to show signs of recovery chances are the base rate is going to increase over the next couple of years. Therefore now is probably the best time to take out a fixed rate mortgage.
How to decide on the right mortgage
There are pros and cons of longer term fixed rate mortgages. The biggest advantage of a longer term fixed rate mortgage is that you are protected from any interest rate rises that happen during your fixed term. However you will need to be sure that you are going to keep the mortgage for the entirety of the fixed term otherwise you will find yourself being hit by early repayment charges, which can be a substantial amount as they are usually a percentage of your loan amount.
Choosing your product
Choosing a mortgage is never as easy as you would hope because there are so many factors to take into account. The thing that most lenders advertise is the interest rates that each product has along with the fixed rate term. What lenders tend not to advertise so obviously are the product fees that each product has. These generally vary from around £1000 to £2000 but there are always exceptions. If you are at all unsure about how to go about choosing the right mortgage product for you, then your best bet is to go to a specialist buy to let mortgage broker who will be able to guide you through all of the pros and cons of each individual product that is relevant to you and also provide you with a cost comparison.
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