"We are seeing many portfolios that include loans on a lender’s variable or reversionary rate, which are now as high as 10%."
Specialist buy-to-let lender, Quantum Mortgages, has launched a new product designed to help landlords who are stuck on reversion rates, unable to remortgage due to higher ICR hurdles.
Available on the lender's single unit and multi unit ranges up to 70% LTV, the product allows borrowers with a two-year clean repayment history to refinance, even where the property's rental income does not meet the usual 125% income coverage requirements.
Where there is no additional borrowing, other than refinance costs, the minimum ICR requirements will be reduced to just 100%, meaning the rental income need only cover the new mortgage payment.
The 100% ICR product, which has rates from 5.99% with a refund of the valuation fee, will be live for submissions tomorrow (Friday 29th September).
The product is available to individuals and limited companies with acceptable properties including, standard houses, flats and studios (including those with shorter leases), high rise blocks, plus HMOs and multi unit blocks of up to 6 units.
In addition, Quantum has reduced rates on its single unit, multi unit and specialist ranges by up to 40bps, while the expat and foreign national range has seen reductions of up to 1.30%. The QML Pro range, which caters for nonstandard property construction and specialist tenancies, has also been reduced by up to 70bps.
Jason Neale, managing director at Quantum Mortgages, said: “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 came to the end of a five-year fixed where the initial ICR was calculated using a rate between 3% and 4% so with today’s interest rates are impossible to refinance.
“Most lenders' solution to the current challenge with ICRs is to continue hiking product fees to subsidise the payrate, with some fees now reaching an eye watering 10%. Whilst this may be a solution for some landlords, we wanted to provide an alternative option which doesn’t erode too much of their equity.”
