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Buy to let investors need to be savvy with their mortgages to avoid falling into bad value deals and ending up on a standard variable rate.
When fixed rate deals end there is the potential for landlords to end up with deals that do not help them make the best of their finances. 33 per cent of mortgage holders end up on their lenders Standard Variable Rate (SVR) last year, which costs them an average of £371. This is according to recent research by Countrywide and online mortgage advisor Dynamo.
Those who are remortgaging and did not sort out their deal in time spent an average of 42 days on their lender’s SVR. This led to an additional cost of £61.83 according to the research. This was calculated by looking at the cost of not remortgaging before the existing mortgage product expires through tracking the proportion of people who ended up on their lender’s SVR during 2017 and how many days they remained on that rate.
D J Alexander Financial Services also added that aside from the mortgage issues, many landlords allow their finances to lapse through inefficiencies such as unchecked insurance.
Head of DJ Alexander Financial Services, Alan Kent, explained: ‘We have estimated that one in three landlords are paying too much for their mortgage which is a simple fix and could save thousands of pounds. Being a landlord has become much more complicated in the last couple of years and many people may not realise just how stringent and problematic the impact of many of these changes will be on their investment.’
He continued: ‘Income will be hit as rents remain relatively static or falling across the UK, while costs are rising, and the ability to offset expenses hits profitability. There are ways to reduce costs at every stage and at every level of business, but they don’t magically occur, and homeowners must examine all financial aspects of their investments to ensure they are maximising their income.’