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Interest Only Mortgages are back

As reported on This is Money on 19 Nov, the Leeds Building Society are now offering 2yr and 5yr ...

As reported on  This is Money on 19 Nov, the Leeds Building Society are now offering 2yr and 5yr fixed rate mortgages at 2.49% and 3.19% respectively.

Leeds Building Society

This offer is available for up to 50% LTV.  Is this any good for BTL Landlords and investors?

Let's say you have £150,000 to invest.  At 50% LTV, we have £300,000 to spend.  Options available in RG14 offered on Rightmove as at 28 Nov 14 include flats at the Racecourse development, along with 3 or 4 bed semi detached and terraced houses.  We'll consider the Racecourse for this example due to the warranty offered by DWH for 5 years.

Rental income can be confidently predicted as around £1200 pcm. 

With the interest only repayments of £311.23 (2 yr fixed rate) or £398.72 (5 yr fixed) we're looking at rental income of approx £10,668 pa. or £9,615 pa.

This would indicate a return on capital of 7.1% or 6.4%. 

In this example we have not included stamp duty, fees, service charges and so on, which ought to be discussed with a suitably qualified and authorised professional prior to an investment.

To discuss the example given, or for advice on the most suitable properties for rental, please give us a call on 01635 888 288.

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