Long-term fixed rate mortgages top for buy-to-let

Five- and ten-year fixed rate mortgages are frequently the best value deal available in the buy-to-let mortgage sector, a new survey has found.

Independent product rating service, Business Moneyfacts, found in its latest investigation into the market that long-term deals dominate the top fifteen fixed rate products.

In fact, 13 of the top fifteen fixed rate products available have their interest rates frozen for at least five years, with six of the top seven deals having a fixed rate for between seven and ten years.

The survey calculated the true cost of buy-to-let mortgages over ten years, assuming a £75,000 interest-only mortgage.

The dominance of longer-term deals represents a sea change over just two years, when the same survey found the best fixed rate deals were the short-term ones.

Nikki Cann, editor of Business Moneyfacts commented: "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.

"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.

This change was brought about by the slowing of the buy-to-let market, which has seen lenders looking to poach customers from their competitors, Ms Cann explained.

"Obviously lenders want to hang on to their business and long-term deals mean long-term customers," she added.