Quantum Mortgages will launch a 100% interest cover ratio product to help landlords trapped as “mortgage prisoners” and are unable to remortgage due to high rental income margins, from tomorrow (29 September).
The specialist buy-to-let lender says the loan is available on its single-unit and multi-unit ranges, up to 70% loan to value, which “allows borrowers with a two-year clean repayment history to refinance, even where the properties rental income does not meet the usual 125% income coverage requirements”.
It adds, that where there is no additional borrowing, other than refinance costs, the minimum interest cover ratio requirements will be reduced to 100%, “meaning the rental income need only cover the new mortgage payment”.
The 100% interest cover ratio calculation product, carries rates that start at 5.99%, with a refund on the valuation fee.
The loan is available to individuals and limited companies including, standard houses, flats and studios — including those with shorter leases–, high rise blocks, houses in multiple occupation and multi-unit blocks of up to six units.
Meanwhile, Quantum has cut rates on the single-unit, multi-unit and specialist ranges by up to 40 basis points.
Its expat and foreign national range has been reduced by up to 1.3%. Its QML Pro range, which caters for non-standard property construction and specialist tenancies, has been cut by up to 70bps.
Quantum Mortgages managing director Jason Neale says: “We are seeing many portfolios that include loans on a lender’s variable or reversionary rate, which are now as high as 10%.
“These are mortgages that have recently come to the end of a five-year fix, where the initial interest cover ratio was calculated using a rate between 3% and 4%, so with today’s interest rates, are impossible to refinance.
“Most lender’s solution to the current challenge with interest cover ratios, is to continue hiking product fees to subsidise the payrate, with some fees now reaching an eye-watering 10%.
“While this may be a solution for some landlords, we wanted to provide an alternative option which doesn’t erode too much of their equity”.
