It also implements several criteria changes
Specialist lender Paragon Bank has slashed rates on five-year fixed rate buy-to-let mortgages by up to 70 basis points (bps), accompanied by changes to the reference rate and modifications to the criteria regarding minimum experience and maximum loan terms.
For the five-year fixed rate mortgage with a 5% fee, applicable to the purchase or remortgage of single self-contained properties, the lender has decreased rates from 5.20% to 4.50%. For energy-efficient homes boasting an energy performance certificate rating of ‘A’ to ‘C’, the rate is slightly lower at 4.45%.
Meanwhile, houses in multiple occupation (HMOs) and multi-unit blocks (MUBs) can now be mortgaged at 4.70%.
Additional rate adjustments in the latest round of changes include a 55bps reduction, from 5.94% to 5.39%, on a five-year fixed-rate nil fee product accompanied by a £750 cashback. For Paragon’s EPC ‘C’ and above loan, the rate stands at 5.34%, while HMOs and MUBs carry a rate of 5.59%.
These modified mortgage products are available at up to 75% loan-to-value (LTV) for landlords applying through limited company structures or in personal names in England, Scotland, and Wales.
As for the reference rate, Paragon has reduced it from 5.50% to 5%. Consequently, interest coverage ratios (ICR) are now calculated in line with the initial rates, with the exception of sub-5% products, where ICRs are computed at 5%.
The bank has also extended its maximum loan term, allowing borrowers to opt for terms ranging from 25 to 35 years. It has also reduced the minimum experience required for buy-to-let landlords applying for HMOs and MUBs, now set at a minimum of two years, down from the previous three.
“It’s great to get the year off to a positive start by taking up to 70bps off our 75% LTV five-year fixed rate mortgages,” Louisa Sedgwick (pictured), commercial director at Paragon Bank, remarked. “With a mix of 5% and nil fee options, some with £750 cashback, we’re aiming to offer products that work for more landlords.
“This is also a key driver in our decision to reduce our reference rate from 5.50% to 5%. We’ve listened to brokers who have told us that the most important consideration for their clients when sourcing mortgages is affordability - so calculating ICRs at a lower rate will help with this. Additionally, we have eased some of our criteria across the maximum loan term and minimum experience for HMO and MUB applications.”
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