Buy to Let Market Update – June 2023

By Doug Hall, Director, 3mc

Welcome to ‘Buy-to-let market’, a column aimed at providing you with recent criteria and product updates within the buy-to-let lending markets. The information within this article is correct as at 08/06/2023.

Buy-to-let market update: –

BM Solutions – has improved and simplified its stress rates, removing the minimum £55k incomes stress test qualification, improving 5-year fixed rate minimum stress rates and improving like-for-like remortgage minimum stress rates. On like-for-like remortgages, BM Solutions reduced the stress rate on 2-year fixed rates to 5.50% or pay rate +1%, and on 5-year fixed rates to 5% or pay rate +1%.

For purchases, or where a remortgage includes capital raising, BM Solutions reduced the stress rate on 5-year fixed rates above 65% loan to value (LTV) to 5.50% or pay rate +1%. On applications where the LTV is less than 65%, this was reduced to 5% or pay rate +1%.

Accord Mortgages – has re-introduced 80% LTV buy-to-let mortgages. The lender has also lowered the interest coverage ratio (ICR) rates on its buy-to-let mortgages. For landlords remortgaging on a like-for-like basis, the ICR is now 6%, down from 6.5% or the product rate plus 1%, whichever is higher. This applies to products with fixed terms of 5 years or less. For longer product terms, the ICR is now 5.5% down from 6.5%, or the product rate plus 1%, whichever is higher.

For purchase or remortgage with capital raising, the ICR has dropped from 7.5% to 6.5%, or the product rate plus 2%, whichever is higher. This applies to fixed terms of 5 years or less. For products with initial terms of longer than 5 years, the ICR will reduce from 6.5% to 5.5% or the product rate plus 1%, whichever is higher.

The ICR for basic rate taxpayers will remain at 125%, and for higher rate taxpayers will continue to be 145%.

Paragon Bank – has introduced a selection of 2 and 5-year fixed rates to their portfolio and non-portfolio ranges. With a variety of fee options available, all the products benefit from a free mortgage valuation.

The Mortgage Works – has launched a new range of buy-to-let fixed rate products. 2-year fixed rates up to 65% LTV start from 4.49% for purchases and remortgages and have a 3% lender fee. 5-year fixed rates up to 55% LTV start from 4.94% for purchases and remortgages and have a 3% lender fee. The lender has returned to lending at 80% LTV on its buy-to-let, let-to-buy and limited company range of mortgages. 2-year fixed rates at 80% LTV will be available from 5.74% and 5-year fixes start from 5.94%, both with a 2% fee. All rates are available for purchase and remortgage with other rate/fee combinations also available. Limited company fixed rates start from 6.39% with a 2% product fee, available for purchase, remortgage and further advances.

The range of 80% LTV products will be available where a property has an EPC rating of C or above.

The lender has also simplified its affordability criteria, which it says will improve the position for the majority of applications received. For trackers, variable rates and fixes at 2 years or below, the stress rate will be the higher of pay rate +2% or 5.50%. For like-for-like remortgages and fixed rates at 5 years or over, the stress rate is the higher of pay rate or 4.50%.

For buy to let and let to buy, the ICR will be 130% at the lower tax rate and 165% at the higher tax rate. The ICR for HMOs and limited company HMOs is 175% and the ICR for limited company buy to let is 130%.

The lender has also reduced the background portfolio stress rate from 5.5% to 4.5%.

Santander for intermediaries – has reduced its buy-to-let affordability rates, with its standard affordability rate decreasing to 7.59% from 8.25%. Its 5-year fixed affordability rate has decreased to 6.09% from 7.25%. Its pound-for-pound remortgage affordability rate has gone down to 6.09% from 7.75%.

Vida Homeloans – has launched a 2-year fixed limited-edition mortgage as part of its new buy-to-let range. The limited-edition product is available at 75% LTV and has a rate of 5.19%. The lender completion fee is 3%. The lender will accept first-time landlords and limited company applications.

Aldermore Bank – has launched new buy-to-let options for new borrowers available at 75% LTV, either with a £1,999 fee, 1.5% fee or no fee. There are 2 and 5-year fixes, with rates beginning at 5.98% for a discounted product either for individual or limited company landlords. 

The products also offer a free valuation.

For further information on buy-to-let mortgages both for individuals and limited companies please contact SAL Mortgages on 0131 450 7169 or visit the SAL website www.scottishlandlords.com

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Please note lenders have different minimum criteria requirements and not all landlords and property types will qualify for a specific product. The product rates are correct at the time of writing the article and are subject to change.

This is an advertisement only and in no way should be viewed as a personal recommendation or advice. Before a recommendation of the suitability of the product can be given, we will direct you to 3mc (UK) Limited who can provide independent mortgage advice. As part of this they will ask questions so that they can fully understand your circumstances before giving advice.

SAL Mortgages is operated exclusively for the Scottish Association of Landlords (SAL) by 3mc (UK) Limited who is Authorised and Regulated by the Financial Conduct Authority and is entered on the FS Register under reference 302992.

Please note: 3mc can advise/arrange Business Buy to Let (BBTL) and Consumer Buy to Lets (CBTL). Of the two, only Consumer Buy to Lets are regulated by the FCA.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

ANY PROPERTY USED AS SECURITY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

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