Business Moneyfacts buy-to-let survey

The survey analyses buy-to-let mortgages on a true-cost basis over ten years. The calculations are based on a mortgage of £75,000 on an interest-only basis and assuming a maximum loan-to-value of 75 per cent.

Two years ago, the same survey showed the best fixed rate deals were the short-term ones – just one featured product offered a rate fixed for longer than five years. But in this latest report, thirteen of the fifteen top places are taken by long-term deals.

Nikki Cann, Editor of Business Moneyfacts explains: “Two years ago, you could argue that some fixed rates were a bit of a waste of money, because even the cheapest fixed rate in our survey cost around £4,000 more (over ten years) than it’s variable counterpart. That £4,000 extra may have offered the borrower some peace of mind, but frankly it didn’t offer it for very long. For long-term reassurance you had to pay through the nose. Now long-term fixed rates offer a far better deal. The rates have come down, and investors have an affordable option where they know exactly how much their repayments will be for an extended period. You may well still end up paying around £4,000 more for the security than you would for a variable rate, but now it’s a level of security worth paying the extra for.”

So why is there this shift in the market? Nikki Cann continues: “The buy-to-let market has slowed and there is much less new business to go round so providers will be looking to poach customers from their competitors. Obviously lenders want to hang on to their business and long-term deals mean long-term customers.

“Also, a raft of base rate rises coupled with static rents caused problems for some buy-to-let landlords. With further base rate increases predicted, it makes sense for lenders to encourage investors to choose products with fixed long-term pricing.”

The tables below show the top fifteen variable rate and fixed rate buy-to-let mortgages.

Variable and Discounted Rates As at 8.3.05

Institution Rate Total cost

1 TBMC 5.45% V £116,894.40

funded by Platform

2 Premier Mortgage Service 5.55% V £117,630.60

funded by Platform

3 Derbyshire BS 5.59% V £117,955.60

4 Cheltenham & Gloucester 5.65% V £118,248.40

5 Woolwich 5.25% D £118,359.40

6 The Mortgage Operation 5.60% V £118,384.00

funded by BM Solutions

7 Pink Home Loans 5.60% V £118,384.00

funded by BM Solutions

8 GMAC Residential Funding 5.70% V £118,740.00

9 TBMC 5.70% V £118,740.00

funded by Norwich & Peterborough

10 Woolwich 5.54% D £118,885.00

11 Stroud & Swindon BS 5.74% V £118,950.00

12 Premier Mortgages Service 5.75% V £118,995.60

funded by Scarborough BS

13 Platform 5.74% V £119,055.00

14 Pink Home Loans 5.71% V £119,094.60

funded by Mortgage Trust

15 Premier Mortgage Service 5.75% V £119,110.60

funded by Woolwich

D = Discount V = Variable

Fixed As at 8.3.05

Institution Rate Term Total cost

1 Ipswich BS 5.89% F to 31.12.14 £120,126.90

2 Scottish Widows Bank 5.59% F to 31.5.10 £120,387.52

3 Cheltenham & Gloucester 5.59% F to 31.3.12 £120,409.60

4 Exclusive Connections 5.99% F to 31.3.15 £120,929.60

funded by Mortgage Express

5 The Mortgage Operation 5.99% F to 31.3.15 £120,949.60

funded by Mortgage Express

6 Pink Home Loans 5.99% F to 31.3.15 £120,964.60

funded by Mortgage Express

7 Mortgage Express 5.99% F to 31.3.15 £120,994.60

8 Exclusive Connections 5.49% F to 31.3.10 £121,267.20

funded by Mortgage Express

9 The Mortgage Operation 5.49% F to 31.3.10 £121,287.20

funded by Mortgage Express

10 Pink Home Loans 5.49% F to 31.3.10 £121,302.20

funded by Mortgage Express

11 Mortgage Express 5.49% F to 31.3.10 £121,332.20

12 Platform 5.49% F to 1.5.10 £121,641.57

13 Capital Home Loans 4.75% F to 31.5.07 £121,653.88

14 Platform 5.69% F to 1.5.10 £121,904.07

15 Scottish Widows Bank 5.69% F to 31.5.07 £122,034.40