Buy-to-let market update

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 (BTL) lending markets. The information within this article is correct as at 02/10/2023.

BTL market update: –

The Mortgage Works – has reduced BTL rates by up to 0.50 per cent across a selected range of its new business products. Product variations include five-year fixed rates, now down to 4.99 per cent with a 3 per cent lender fee at 55 per cent loan to value (LTV). 5.04 per cent with a 3 per cent lender fee at 65 per cent LTV, and 5.59 per cent with a £1495 lender fee, available up to 75 per cent LTV. The lender has also reduced selected rates in its let-to-buy (LTB)  large portfolio range by up to 0.40 per cent and its house in multiple occupation (HMO) range and limited company range by up to 0.40 per cent for new business customers. The lender has increased their background portfolio stress rate from 4.5 per cent to 5.25 per cent.

BM Solutions – has reduced BTL and LTB rates. Examples of changes include its fee-free two-year fixed rate at 50 per cent LTV reduced by 0.91 per cent to 6.14 per cent. At 65 per cent LTV, reduced by 0.91 per cent to 6.34 per cent and at 75 per cent LTV reduced to 6.74 per cent. The lender has amended the stress rates for various scenarios, this has reduced to pay rate plus margin for five-year fixed and like for like remortgages. It has reduced to pay rate plus margin for five-year fixed, 65 per cent LTV or less and increased for all two-year fixed rates. The lender has also launched a top slicing solution. Top slicing enables customers who have a shortfall in their required lending to use a proportion of their earned income when the rental income for the BTL property is not sufficient to hit the standard rental cover ratio.

Virgin Money – has launched new intermediary exclusive products, alongside rate reductions on existing deals. On BTL portfolio deals, a number of fixed rates for remortgage and purchase are available with a 3 per cent lender fee. These include a two-year fixed rate available up to 60 per cent LTV at 5.17 per cent and a five-year fixed rate available up to 75 per cent LTV at 5.57 per cent.

The lender has also improved its stress rate calculations for both portfolio and non-portfolio landlords, the lender has also lowered its interest cover ratio (ICR) to 125 per cent for basic rate taxpayers. For remortgaging with no additional borrowing, stress rates will now be calculated at the higher of 5 per cent or pay rate +1 per cent. For purchase or remortgage with additional borrowing, fixed rates below five years or variable rate mortgages will now be calculated at 5.5 per cent or pay rate +2 per cent. Five-year plus fixed rates will be calculated at 4.5 per cent or pay rate +1 per cent.

Santander for Intermediaries – has reduced all BTL fixed rates by between 0.26 per cent and 0.35 per cent. On its BTL products, the standard affordability stress rate has risen from 7.59 per cent to 8.52 per cent while the five-year fixed affordability rate has increased from 6.09 per cent to 7.02 per cent. Its pound-for-pound BTL remortgage affordability rate has also gone up from 6.09 per cent to 7.02 per cent.

At the same time, the lender has lowered the ICR for higher tax band borrowers to 140 per cent, down from 145 per cent.

Accord Mortgages – has cut rates in its BTL range by up to 0.51 per cent. The lender’s two-year fixed remortgage at 75 per cent LTV has fallen from 7.24 per cent to 6.73 per cent. It has no product fee, free standard valuation, and remortgage legal service. The two-year fixed rate at 80 per cent LTV for purchase has gone down from 6.73 per cent to 6.71 per cent. It is subject to a £995 product fee, free standard valuation, and £250 cashback. Its five-year fixed rate at 60 per cent LTV for remortgage has reduced from 5.79 per cent to 5.54 per cent. There is a choice of £250 cashback or remortgage legal services and free standard valuation.

Leeds Building Society – has reduced their limited company BTL fixed rates by up to 0.30 per cent.

NatWest Intermediary Solutions – has reduced BTL purchase rates by up to 0.31 per cent and remortgage rates by up to 0.21 per cent across selected two and five-year deals. The lender has also reduced the stress rate on its BTL mortgages.

The stress test for two-year fixed mortgages has reduced from 8.6 per cent to 8.15 per cent, while for five-year fixes this has reduced from 7 per cent to 6.78 per cent. On like-for-like remortgages, the stress rate is now 7.55 per cent, down from 8.21 per cent.

Paragon Bank – has launched new limited-edition products. The new products are available on their portfolio and non-portfolio range, including a 5-year fixed rate which has a rate of 4.69 per cent. The products have a variety of lender fee options, from 7 per cent to zero lender fee options. All products have the benefit of a free valuation.

Precise Mortgages – has simplified the minimum ICR for personal ownership applications and improved how it assesses BTL affordability on short-term fixed rates and variable rate trackers.

The minimum ICR for higher rate and additional rate taxpayers will now be 140 per cent where previously it was 145 per cent for higher rate and 160 per cent for additional rate. The stress rate for short-term fixed rates and variable-rate trackers will now be assessed at pay rate plus 1.55 per cent (minimum 5.50 per cent). The lender has also relaunched its refurbishment BTL product. The product combines short-term finance with the security of a long-term exit. The proposition provides a choice of exit, depending on the type of refurbishment work being carried out, helping landlords maximise rental yields and optimise capital value.

The Mortgage Lender – has released two new BTL products, including a standard and an HMO and multi-unit block (MUB) deal, and lowered rates for selected deals. The new products include a standard two-year fixed rate priced at 4.69 per cent, with a 5 per cent lender fee. Its HMO and MUB version comes to 6.19 per cent and 3 per cent lender fee. The lender has cut rates on 4 of its standard five-year fixed standard and standard HMO products. Its 75 per cent LTV deals have reduced by up to 0.15 per cent, with lender fees ranging from two to five per cent and a flat fee of £2,495.

Foundation Homeloans – has launched a semi-exclusive F2 Extra range through selected brokers and packagers, including 3mc. It includes extra-large HMOs, semi-commercial property and holiday lets, and properties requiring large loans up to £5 million.

Aldermore Bank – has launched two new limited-edition products. A five-year fixed rate for individual and company landlords with single residential investment properties at 5.09 per cent at 75 per cent LTV is available. The other deal includes a five-year fixed rate for individual and company landlords with multiple properties at 5.09 per cent at 75 per cent LTV. Both options have a 7 per cent lender fee.

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

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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