Percentage-based buy-to-let fees now most popular

Ryan Bembridge

April 19, 2017

Buy-to-let lenders are favouring product fees calculated on a percentage rather than flat basis, Mortgage for Business’ Buy to Let Mortgage Costs Index has found.

In the first quarter of 2017 44% of all buy-to-let mortgage products came with a percentage-based fee compared to 41% for flat fees.

This is the first time percentage-based fees have been more popular for four years.

Steve Olejnik, chief operating officer of Mortgages for Business, said: “With the challenges lenders have faced to generate business in the face of successive blows to the buy to let sector, it is only natural that many have chosen to focus on cutting rates at the cost of increased fees.

“The recent trend towards percentage-based fees is an example of lenders doing exactly this, as fees of this type become more expensive for larger loans.”

The cost of the average flat fee has also risen from £1,397 in Q4 2016 to £1,446 in Q1 2017.

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