New mortgages launch with buy-to-let tax changes in mind
12 May, 2017
With the start of the 2017-18 tax year last month, the latest in a series of changes affecting buy-to-let landlords came into effect.
These latest changes mean that tax relief on mortgage interest is being phased out between now and 2020, and will be replaced with a tax credit equivalent to the basic rate of income tax – a move that is potentially costly for many landlords.
Now three mortgage providers have launched buy-to-let offset mortgage products to help buy-to-let landlords cut their costs as tax bills rise.
The products work by allowing borrowers to put savings into an account with the lender, which is then offset against the balance of the mortgage and effectively reduces the interest due.
The products available from the three lenders do differ substantially in some important ways. One product charges an initial 2.99 per cent fixed rate for two years before reverting to the standard variable rate of 5.29 per cent. Another charges an uncompetitive 5.35 per cent, while the other product available on the market is a lifetime standard variable rate with no discount window.