Buy to let lenders, Vida Homeloans and BM Solutions have revamped their buy to let mortgage products, introducing new rental calculations and top ups for landlords and reducing rates.
In response to the stricter underwriting regime that was introduced by the Prudential Regulation Authority (PRA) in January, Vida Homeloans has implemented a new rental cover of 125% for basic rate tax payers and limited companies. Borrowers who use surplus income to make top ups can lower the threshold to 115%.
Higher rate tax payers will also be able to lower the 140% rate of rental income to 120%, by doing the same.
A notional rate of 5% will be applied for pound for pound remortgages, otherwise a minimum rate of 5.5% will apply to rental calculations.
Vida Homeloans is one of a raft of lenders to revise its mortgage criteria in light of the PRA’s new underwriting rules.
In addition to the rule which mandates a minimum borrower interest rate of 5.5% during the first five years of a buy to let mortgage, the PRA has stipulated that lenders must take into account borrower’s costs, including tax liabilities, verified personal income and potential future rate rises, when assessing landlord affordability.
It is already well known that some landlords will see their tax payments increase once the government introduces cuts to landlord tax relief in April.
The Government’s latest Housing White Paper, meanwhile, encourages lenders to support Build to Rent initiatives and longer term lets on new builds.
Vida Homeloans currently offers three-year assured shorthold tenancies (ASTs) on student and corporate lets.
Louise Sedgewick, director of mortgage sales at Vida Homeloans’ said:
“Vida Homeloans prides itself on being a modern mortgage lender – committed to helping borrowers from a range of backgrounds with their specialist needs. Our buy-to-let proposition is designed to give flexibility to landlords and demonstrates our appetite to advance mortgages to landlords who want to offer longer tenancies.”
The rate of 1.99%(4.5% APR) applies to a two-year fixed rate product at 60% LTV and the lender has also released a rate of 2.34%(4.5% APR) at 75% LTV, again for a two-year fixed loan.
In addition, two-year 75% LTV large loan products have been reduced by 0.05% and now start from 2.14%(4.5% APR).
BM Solutions has also extended end dates on all fixed rate products by three months.
Phil Rickards, Head of BM Solutions, said:
“These new rates and extended end dates help continue highlighting our commitment to supporting the intermediary market.
“Following the recent launch of our online calculator to help brokers navigate the tax changes and our multi award-winning service, we continue to support brokers at every stage of the mortgage process.”
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