Landlords will be tested at pay rate plus 1%
Specialist buy-to-let lender Landbay has launched a range of two-year fixed rate like-for-like remortgage products with a lower interest cover ratio (ICR) stress test.
The lender said that landlords remortgaging with no change to their borrowing requirements will be stress tested at pay rate plus 1%, instead of the standard calculation of pay rate plus 2%.
The like-for-like remortgage products at 75% loan-to-value (LTV) have rates of 4.99% for the one with a 4% fee, 5.49% for the 3% fee product, and 5.99% for the one with a 2% fee. The maximum loan size is £1 million. The one with a £1,499 fixed fee has a rate of 5.99% and maximum loan size of £74,999.
A trading company like-for-like remortgage product at 75% LTV is also available at 5.69% with a 3% fee and a maximum loan size of £1 million.
Landbay said the reduced ICR stress test also applied to its reduced interest rate, loyalty remortgages, introduced recently for like-for-like existing Landbay borrowers.
“There is a lot of remortgage activity this year, and we are acutely aware that borrowers will have to take higher rates than their current deal,” said Paul Brett (pictured), intermediaries managing director at Landbay. “Applying a stress test is always a requirement, but we have tried to soften the blow for buy-to-let landlords whose mortgage is due for renewal.
“It is clear that two-year fixed rates are attractive to some borrowers due to the volatility of the current market. Lowering the rate on the stress test allows borrowers more breathing space when the affordability calculation is applied.”
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