Buy-to-let mortgage rates in the UK remain markedly higher than residential home loan options, new findings have shown.
Despite average rates for two, three and five-year fixed-rate buy-to-let products experiencing a significant drop since September 2010, the study from independent financial research company Defaqto revealed these are still considerably greater than for normal residential mortgages.
In addition, the investigation found average arrangement fees and interest rates in the buy-to-let sector are also higher than that recorded for their residential home loan equivalents.
David Black, insight analyst for banking at Defaqto – which has been in operation since 1994 – said a number of new lenders have entered the buy-to-let market of late, with existing companies also looking to improve their product ranges.
The industry figure suggested: “People should factor mortgage fees into their calculations as, like the interest rate, they tend to be much higher for buy-to-let mortgages than for residential mortgages.”
This can therefore have a notable impact on the overall cost of a home loan, Mr Black observed, adding many borrowers may require the help of an expert in the field when choosing the best deal for their personal circumstances.
