A purchase only mortgage is available up to 90% loan-to-value (LTV) with rental cover of 100% required and no Early Repayment Charge (ERC) at any time.
Ray Boulger, senior technical manager John Charcol said: “Many BTL investors’ principal objective is to maximise their medium to long-term capital gain, or overall return, rather than generate surplus income. Such investors are keen to gear up as much as possible, even if it means using funds other than the rent to support the mortgage and other outgoings. However, in many cases the gross rental yield on their BTL property(ies) seriously restricts the choice of mortgages. Therefore, these two mortgages have been designed with rental cover requirements that are not too onerous.”
The cheaper rate is available up to 85% LTV. The rate is Bank Rate + 0.39%, giving a current rate of 5.64%, with a fee of £999. An Early Repayment Charge (ERC) applies for the first three years, although up to 10% p.a. can be repaid ERC free. The rental cover required is 125%, calculated at a notional rate of 5%, and on remortgages there is a free valuation and free legals.
The 90% LTV product is available at a lifetime rate of Bank Rate + 0.74% and this deal has no ERCs at any time. The arrangement fee is 0.5% for investors who can meet a rental cover requirement of 115%, calculated at the pay rate, currently 5.99%, but the same rate is also available with a fee of 1% with a lower rental cover requirement of only 100%, also calculated at the pay rate.
Boulger continued: “To obtain the maximum LTVs available on these deals investors will need a gross rental yield of 5.31% for 85% LTV on the first deal and 5.39% for 90% on the second deal. With lifetime rates and rental cover requirements this good there is little point in opting for a three or five year tracker or discount deal. For most BTL investors’ the choice for the best value mortgage tracker is now primarily between taking out a cheaper two year tracker, with a view to continuing to take up a new deal every two years, or securing the convenience of a lifetime tracker at a slighter higher rate.”
Product Details:
Maximum 85% LTV product – Purchase & Remortgage
- Bank Rate + 0.39% for term, current initial rate: 5.64%.
- APR: 5.8%.
- Arrangement fee: £999, can be added.
- Exit fee: £275.
- John Charcol booking fee: £75.
- ERC: 6 months interest at pay rate in 3 years, but up to 10% p.a. can be repaid ERC free.
- On remortgages free valuation and free legals.
- Maximum loan: £2.5 million
- Rental cover required: 125%, calculated at a notional rate of 5%.
- Interest calculated daily.
- Available to limited companies and limited liability partnerships.
- Bank Rate + 0.74% for term, current initial rate: 5.99%.
- APR: 6.2%.
- Arrangement fee: 0.5% or 1% of mortgage amount, depending on rental cover required (see below). Can be added.
- Exit fee: £195.
- John Charcol booking fee: £75.
- ERC: None
- Maximum loan: £675,000 (90% of £750,000).
- Rental cover required: 115%, calculated at pay rate, in which case the fee is 0.5%, or 100%, calculated at pay rate, in which case the fee is 1%. If the rental income is inadequate to support the loan required other income can be considered.
- Interest calculated daily.
