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Deposits required are lowered

By Lincolnshire Echo  |  Posted: March 13, 2014

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Mortgage firms are rushing to woo buy-to-let investors by slashing the deposits required.

Normally lenders demand at least 25 per cent of the price of a property but this week firms have unveiled mortgages with a 20 per cent down payment.

Mortgage Trust has the cheapest two-year fixed-rate, for those with a deposit of this size, at 4.1 per cent, with a 1.75 per cent fee.

Monthly repayments on a £150,000 interest-only loan are £512. Total cost is £14,913.

Landlords able to find just 15 per cent of the value of the property they want to let out can go to Kent Reliance — though they will face higher repayments. It has a two-year fixed-rate mortgage at 4.99 per cent and a 2.5 per cent arrangement fee. Monthly repayments are £625 and the total cost of a £150,000 mortgage is £18,750.

For a 25 per cent deposit, Post Office Mortgages has a two-year fixed rate of 3.29 per cent with a £1,495 fee. The total cost over two years would be £11,369.

The Mortgage Works boasts a low rate of 2.99 per cent but the cost of the mortgage is pushed up by a 2.5 per cent fee. The total cost of the £150,000 mortgage would be £12,702 over two years, making the Post Office deal a better offer.

If you have a bigger deposit of 40 per cent, Post Office Mortgages is offering landlords a rate of 2.98 per cent for two years at 2.98 per cent with a £1,495 fee. A 25-year £150,000 mortgage would cost £10,423 over two years when you include the fee. This actually works out cheaper than the lowest rate on the market from The Mortgage Works.

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