Tracker Buy To Let mortgages explained
Recently specialist lender LendInvest, launched its first variable rate tracker Buy to Let mortgage with no Early Repayment Charges. This product is designed with landlord customers in mind during this volatile period in the Buy to Let rates market.
It is expected there will be more variable rate product options appearing in the coming months. With this in mind, here’s a quick guide to how tracker products work, what it means for landlords and why it is the right time for lenders to embrace them.
What is a tracker mortgage?
A variable rate tracker mortgage is one where the interest rate you pay is linked to the Bank of England base rate (BBR) and therefore is liable to change, either up or down when the base rate changes.
Lenders will add a notional rate on top of the BBR rate. For example, LendInvest’s tracker starts from BBR+2.29%.
What are the benefits right now?
The bulk of lenders have withdrawn their 2-year fixed products, and all of them have been forced to raise rates in response to the current market uncertainty.
This means landlord customers looking to purchase, or remortgage, face the unenviable task of choosing between higher rate 5 and 7-year fixes.
A tracker can be used as a short-term solution, and if there are no Early Repayment Charges it is a means to purchase or remortgage in the current environment without tying customers down to a long-term high rate with exit penalties.
Why are lenders embracing them now?
Put simply this offers you options as we navigate the current environment.
While everyone is paying higher rates than they were 12, or even 6, months ago, a tracker mortgage product is designed with the expectation that rates will go down as the market corrects itself.
Without tying customers in for the long term either, it enables landlords the flexibility to choose a longer-term fixed mortgage solution at a time when rates suit their needs.
To find out more, book a timed appointment with an adviser.
We’d strongly recommend you take professional property tax advice prior to entering into any Buy to Let ventures.
Please note: some Buy to Let products are not regulated by The Financial Conduct Authority.