As part of the enhancement, the Mortgage Works has increased the LTV to 90 per cent across its BTL product range, in addition to an option of 100 per cent rental cover on its three and five-year fixed rates for a 1 per cent arrangement fee, which can be added to the loan
Ray Boulger, senior technical manager at John Charcol, said: “It’s an interesting criteria change, as very few mainstream lenders go up to 90 per cent LTV. It can only be helpful and will help sustain the BTL market, as it gives customers extra funding to invest. A 90 per cent LTV makes a significant impact over 85 per cent because it restricts the amount investors have to pay on a deposit. This means the profit, or loss, on their personal investment will be far greater. The benefits that investors will see, even with paying an extra fee, is the potential profit. A lot of clients are prepared to risk a 100 per cent rental cover even with interest rates potentially rising, because they are in the market for the long-term capital gains.”
The Mortgage Works has also improved its first-time landlord criteria, with products available up to 85 per cent LTV, with the minimum income set at £50,000.
Commenting on the changes, Alec Ruthven, director of AM Ruthven & Associates Ltd, said: “It seems fine to me, but my advice to clients is not to do anything unless it is profitable. They can take the 100 per cent rental cover, but it comes with a bigger risk if the rates nudge up. But I don’t think this product will affect the market too much, as there are other lenders out there with similar products.”
However, Boulger feels the product will have an impact. He said: “This is a trend that will continue, and undoubtedly other lenders will follow.”
The Mortgage Works has also launched a two-year BTL tracker at 4.74 per cent, with no early repayment charges and a two-year self-certification tracker at 4.94 per cent.
