Investment property mortgage rates

Are investment property mortgage rates higher than owner-occupier loans?

Investment property mortgage rates are nearly always higher than owner-occupier loans. Additionally, buy-to-let mortgages are typically higher for limited companies than compared to individuals.


Mortgage interest rates depend on a variety of things, such as what type of property investment, the amount you put toward a deposit and your credit score. Despite higher rates being common for property investments, there are still opportunities to earn lucrative returns through buy-to-lets. 


Mortgage interest rates are lower than normal


Currently, there are lower mortgage interest rates than normal. Research by revealed the average fixed rate buy-to-let mortgages in February 2020 was 2.75% for a two-year mortgage and 3.20% for a five-year mortgage. The rates have decreased by over a quarter of a percent year-on-year. 


The average rate of a five-year fixed mortgage has dropped by 1.19% since 2015, providing opportunities for landlords to switch deals and save on mortgage repayments. This drop in mortgage rates across the board is expected to boost investors’ profits.


The lower current interest rates mean the cost of borrowing is lower. This makes it an appealing time for property investors to buy as they are likely to have lower mortgage payments and could possibly afford to buy a more expensive property. As mortgages can help you expand your property portfolio quicker, investing when interest rates are lower can give you a higher return on investment and more buying power. 


Buy-to-let mortgage sector is expected to become more competitive


One in five brokers are planning to introduce more buy-to-let business this year, according to Paragon Bank. This means investors are likely to have more options when it comes to buy-to-let mortgages, and the competition could continue to keep mortgage rates down.


With PropertyMenu’s deal calculator, we currently estimate 4% yearly interest for a mortgage. We also work with a range of trusted professionals who can provide answers to your queries related to mortgages. Please contact us if you need any advice or recommendations.

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