The Mortgage Works has cut its stress rate by 0.50% for new buy-to-let applications up to 65% loan-to-value on 5-year fixed terms or like-for-like remortgages across all fixed product durations. The revised stress rate will be the higher of 4.00% or the pay rate and takes effect from today.
The change applies to individual applications, including buy-to-let, let-to-buy, large portfolio and HMO cases. For applicants with LTVs above 65%, the stress rate will be the higher of 4.50% or the pay rate. For purchases or remortgages involving capital raising, and for 1- and 2-year fixed terms, the stress rate remains at 5.50% or pay rate plus 2.00%, whichever is higher. Stress rate calculations for limited company applications are unchanged.
Damian Thompson, director of landlord at The Mortgage Works, said: “These positive changes to our stress rates will serve to boost affordability. They will enable landlords to borrow more with us but, at the same, will ensure that we continue to lend responsibly.”
Jeni Browne, business development director, Mortgage Finance Brokers, added: “So many landlords have been unable to remortgage or acquire new properties because of the more onerous rental calculations that have been in play on the back of higher interest rates – this has been at a huge cost to the Private Rental Sector.
“Seeing the UKs largest buy-to-let lender tackle this head on by reducing their rental calculations thus allowing landlords to borrow more per pound of rental income, will mean that property investors will be able to remortgage thus accessing better mortgage rates, and get investing once more.”
