Precise buy-to-let products have a rental calculation of 125% of the pay rate or the reversion rate, whichever is higher.
But the lifetime tracker has no reversion rate, meaning properties with a rental yield of just 3.23% to 3.74% will pass the rental calculation test.
Alan Cleary, managing director of Precise Mortgages, said: “I was recently in a meeting with a London-based mortgage broker who told me that they were having problems placing their buy-to-let business due to the lower rental yields in London.
“Two and 3-year deals are not always the right solution especially where the reversion rate is significantly higher than the initial pay rate and I am hoping this product helps to solve the problem.”
Many properties in the South East, and especially prime central London, have a relatively low rental yield when compared to regional properties and fall foul of lender rental calculation tests, which typically are based on 125% coverage of a nominal 5% pay rate.
Whilst this product has no geographic restrictions, the minimum loan size of £250,000 is likely to favour properties in the South East where capital appreciation has been the strongest.
Alex King, executive director of SPF Private Clients, added: “The buy-to-let sector is expanding rapidly as investors seek better returns than those available via cash or stocks and shares.
“However, one issue landlords face is tight rental calculations, making it tricky to purchase investments such as lower-yielding London properties.”
The 75% LTV product has a pay rate of 3.99% and the 70% product has a pay rate of 3.69%, both carrying an arrangement fee of 3% which can be added to the loan.
