YBS Commercial Mortgages has implemented some positive changes to its buy-to-let offering this week, in a bid to provide further support for landlords.
Following broker feedback, the commercial lender has reduced the stress rate applied to buy-to-let affordability calculations on its commercial buy-to-let products.
The change effectively increases the volume of lending that can be provided to borrowers.
The stress rate has been reduced from 125% Interest Rate Cover (or Interest Cover Ratio – ICR) at pay rate plus 0.30%, to stressing at 125% ICR at pay rate (pay rate is the interest rate on the loan).
This move recognises the reality faced by landlords who face a challenging interest rate environment, as well as ongoing economic headwinds.
The change will increase what landlords can borrow, subject to remaining within the lender’s 75% loan-to-value (LTV) criteria.
This will enable landlords to borrow more on these properties, freeing up capital to invest or to undertake property maintenance.
For example, for each £1m of assets, based on a yield of 4% (rental income of £40,000 per year), assuming a 5-year fix at 5.60%, landlords will be able to borrow around 5.5% or £30,000 more.
Tom Simpson (pictured), managing director of YBS Commercial Mortgages, said: “We understand the role that landlords play in providing much needed, quality rented accommodation, which in the current climate, are in short supply.
“We hope that reducing our stress rate – which is another example of how we continue to respond to broker feedback – will provide the support that their landlord clients need, improving their ability to borrow more in the current, more challenging interest rate environment.
“As a responsible lender, focussed on the importance of high-quality accommodation, these changes will also benefit tenants, as more landlords have access to our product suite.”
