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Let to buy mortgage rate
One of the major decisions that need to be taken when selecting any mortgage is whether to go for a fixed or variable rate. This choice may be even more important when selecting a let to buy mortgage to suit your needs.
The advantage of a variable rate mortgage is that you will be able to benefit fully if interest rates dip below their current level. Those with fixed rate mortgages will still have to pay the same rate, even if the Bank of England base rate drops by a point or two.
However, the advantages of a fixed rate deal may well outweigh this disadvantage, particularly at a time when the most likely trend in interest rates is upwards.
With a fixed rate mortgage it is possible to budget accurately for the whole term during which the rate is fixed. Your plans cannot be upset by a sudden hike in interest rates - you know exactly where you are, and exactly how much rental income you need to cover your expenses.
While some more well-heeled investors may prefer to take the gamble with a variable rate, a fixed rate mortgage is probably the more sensible option for those on a tight budget who need to know where every penny will be going, at least in the short term.
Most fixed term deal last for periods of between one and five years. Some lenders, however, offer rates that are fixed for as long as ten or fifteen years, while a few offer to fix rates for the entire lifetime of the mortgage. The length of fixed rate you opt for will depend on your circumstances and to some extent on a gamble about what is likely to happen to base rates over the next few years.
But bear in mind that most lenders lock you in for the term during which the rate is fixed. Longer fixed terms can mean a serious loss of the flexibility to shop around for better deals and are best avoided unless you are certain you need the long-term stability they offer.
