Sub Five per cent mortgage rate launched

The Mortgage Works has announced the launch of a two year fixed rate buy to let mortgage at less than 5%. The mortgage is a semi exclusive, which means that it is available only through a limited number of mortgage brokers and mortgage clubs, including The Mortgage Warehouse GB Ltd.

The scheme features an interest rate of 4.85% which is fixed until the 30th September 2010. Applications will be considered for mortgages of up to 70% of the value of the property and the rental income needed to qualify is just 120% or the monthly mortgage payment at 4.85%. There are early repayment charges of 5% of the balance repaid during the two year of the fixed rate, and the arrangement fee is set at 4.85% of the amount borrowed.

Commenting on the announcement, Tim Lee of The Mortgage Warehouse said: "Many applicants will be put off by the arrangement fee, which is very high, even for the current climate. However, it could be a mistake to dismiss this scheme out of hand, as when the arrangement fee is annualised over the two years, the product is the equivalent of a two year fixed rate of 7.27% with no arrangement fee. The cheapest buy to let two year fixed rate currently available with no arrangement fee is priced at 7.49% and doesn't have the advantage of rental coverage being only 120% of the mortgage payment at 4.85%"

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