Buy-to-let mortgages just got better

One lender has relaunched its range to give landlords a wider choice and better deals

The buy-to-let market has seen something of a resurgence in 2010 with new lenders launching, such as Precise Mortgages and Aldermore Mortgages, and stalwarts like Kensington Mortgages returning to new lending after temporarily shutting up shop.

The sector may have been bruised and battered during the last few years, but through it all a handful of lenders continued to lend and now dominate the market.

The Mortgage Works (TMW) is one of them, and this year it is really pushing forward in terms of product innovation. As the specialist intermediary lender of Nationwide, it offers a huge range of buy-to-let mortgages, and lends at the highest loan-to value ratio in the entire sector -- 80%.

New deals

Last week TMW launched a range of improvements to its products -- good news for landlords in a sector where it’s still hard for many to refinance their properties.

The key changes are:

The introduction of a one-year tracker with no early repayment charges, offering landlords more flexibility, with the potential to repay early without penalty
New 80% LTV products available with free standard valuation and free standard legal fees, plus a new flat arrangement fee product at this LTV tier
The launch of lifetime variable mortgages with early repayment charges only until 31 May 2011
The launch of a new five-year fixed rate mortgage at a rate of 5.79%, with 3.5% arrangement fee.

Great stuff, but are they any good?

More choice

The introduction of these new mortgage types is very welcome as it gives landlords more choice. Though, of course, not every deal will suit everyone.

The five-year fix at 5.79% is a great rate for a buy-to-let deal, for example, but it is only suitable for those who can suck up the whopping 3.5% fee. Of course, you only pay that fee once in five years, while you would have paid switching fees on two-year deals twice over the same period.

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But for my money it is the changes to TMW’s 80% LTV range that is the best development here. Many landlords have been mortgage prisoners during the last few years with 25% equity needed in order to remortgage. If you didn’t have it, you were stuck on your lender’s SVR or reversionary rate -- with the risk that it could rise.

Earlier this year TMW began lending up to 80% of a property’s value to those with just 20% deposit or equity -- a major development. The fact it has extended and improved this range will appeal to many landlords.

Indeed, many buy-to-let borrowers who thought they were stuck on their deal and unable to switch may want to look again at the mortgages on offer, not just from TMW but across the market. There is a wide range of lenders now operating in buy-to-let, from high street lenders with just one product to specialists with a large range on offer.

Go for broker

The key thing to remember with buy-to-let is that a large proportion of the deals on offer are not available direct to the public. This is because many buy-to-let specialists are intermediary-only lenders -- you access their products through an authorised mortgage broker.

Related how-to guide

Become a buy-to-let landlord

How to pick the right property, get the right mortgage, take out the right insurance, choose the right letting agent and most importantly, unravel all that red tape!

See the guide

There are still plenty of buy-to-let mortgages available direct, from lenders such as The Post Office for example, but you will miss out on a large swathe of the market without the help of a broker.

Of course, many brokers are also buy-to-let specialists and have close relationships with lenders, so they know exactly where you are likely to be accepted for a deal.

Plus they will help you with the form filling and chase the lender for you, making the whole process smoother and potentially quicker.

If you want buy-to-let advice from a fully qualified mortgage broker, why not speak to a whole-of-market, fee free lovemoney.com broker. Call 0800 804 8045 or email mortgages@lovemoney.com for more help.

14 great buy-to-let fixed rates

LENDER	TYPE OF DEAL	RATE	FEE	MAX LTV
The Mortgage Works	2-year fix	4.69%	3.5%	70%
Leeds BS	2-year fix	4.89%	£999	60%
BM Solutions	2-year fix	5.20%	2.5%	70%
Post Office	3-year fix	5.25%	£1,495	75%
Nottingham BS	3-year fix	5.29%	£1,495	75%
The Mortgage Works	2-year fix	5.39%	2.5%	75%
BM Solutions	2-year fix	5.40%	2.5%	75%
Leeds BS	5-year fix	5.49%	£1,549	60%
The Mortgage Works	3-year fix	5.49%	3%	80%
The Mortgage Works	2-year fix	5.79%	2.5%	80%
The Mortgage Works	5-year fix	5.79%	3.5%	70%
Aldermore Mortgages	5-year fix	5.93%	2.25%	75%
Post Office	5-year fix	5.89%	£1,495	75%
The Mortgage Works	3-year fix	5.89%	£2,699	80%

11 top buy-to-let variable rates

LENDER	TYPE OF DEAL	RATE	FEE	MAX LTV
Principality BS	2-year tracker	3.64% (Base + 3.14)	3.5%	60%
Bank of China	Term tracker	3.88% (Base + 3.38)	£1,695	65%
The Mortgage Works	2-year tracker	3.79% (Base + 3.29)	3.5%	60%
The Mortgage Works	2-year tracker	4.24% (Base + 3.74)	3.5%	75%
Nottingham BS	2-year tracker	4.59% (Base + 4.09)	£995	75%
Halifax	2-year tracker	4.79% (Base + 4.29)	2.5%	75%
BM Solutions	2-year tracker	4.85% (Base + 4.35)	£999	60%
Aldermore Mortgages	2-year discount	4.98% (Base + 4.48)	1.25%	65%
NatWest	2-year tracker	4.99% (Base + 4.49)	£1,999	75%
Precise Mortgages	Term LIBOR-linked tracker*	4.99% (LIBOR + 4.26%)	1.5%	75%
The Mortgage Works	Term variable rate	4.99%	£2,999	70%

*London Interbank Offered Rate (0.73)

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