It aims to help landlords hit by rising interest rates
Specialist lender West One Loans has introduced a range of limited edition products with enhanced debt service coverage ratio criteria to help landlords hit by rising interest rates.
Each of the lender’s four new five-year fixed rates comes with a lower debt service coverage ratio (DSCR) of 100%, rather than the usual 125%. This means that landlords only need to charge rent covering 100% of the mortgage repayments rather than 125%, therefore allowing them to borrow more.
The new products, which are available to finance the purchase or remortgage of standard or specialist properties, are as follows:
- W1 standard with rates starting from 6.09% and a 5.0% fee
- W1 standard with rates starting from 6.59% and a 2.5% fee
- W1 specialist with rates starting from 6.29% and a 5.0% fee
- W1 specialist with rates starting from 6.79% and a 2.5% fee
📢 We have an exciting addition to our Buy-to-Let product range effective from tomorrow 26th January 2023, available to key partner firms on a limited edition, semi exclusive basis.
— West One Loans (@westoneloans) January 25, 2023
Follow West One Loans on Linkedin for more - https://t.co/cTPtqNLYyU
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The new range, according to West One, is aimed at helping high-quality borrowers who are locked out of the market, or cannot borrow as much as they could 12 months ago because yields have failed to keep pace with rapidly rising mortgage rates.
West One pointed out that despite the new products having higher rates than some products available within the lender’s range, the lower DSCR requirements would allow landlords to borrow much more. It added that the increased leverage available is further enhanced for houses in multiple occupation or multi-unit freehold blocks and higher rate taxpayers where an increased rental stress ordinarily applies.
“Meeting a lender’s debt service coverage ratio requirements is the number one challenge facing landlords at the moment,” Andrew Ferguson (pictured), managing director of buy-to-let at West One Loans, commented. “Base rate rises coupled with market volatility, have shifted rates upwards of 5.5%. However, in many parts of the country yields haven’t yet caught up, leaving many high-quality borrowers with limited options upon product maturity other than to accept high reversion rates or inject personal cash into the transaction to facilitate the remortgage.
“By launching our new limited edition enhanced DSCR range, we hope to help brokers’ clients meet this challenge and to offer them the finance they need.”
Ferguson, however, stressed that while West One enhanced its DSCR criteria, landlords should still pass its strict underwriting process.
“We are dropping our standard,” he said. “In order to protect borrowers and to maintain the quality of our lending book, landlords will still have to go through the same bespoke and rigorous underwriting process they always do.”
Meanwhile, the specialist lender has also launched a series of limited edition fixed rates that have lower rates and higher fees to help borrowers who need to maximise loan size and affordability.
The new range of two- and five-year fixed rates are available on standard and specialist properties and start at 5.09%.
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