Quantum Mortgages, the specialist buy-to-let lender, has launched a new product designed to help landlords who are stuck on reversionary rates, unable to remortgage due to higher Income Cover Ratio (ICR) hurdles.
Available on the lenders single unit and multi unit ranges, up to 70% loan-to-value (LTV), the product allows borrowers with a 2-year clean repayment history to refinance, even where the properties 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 the 29th of September.
The product is available to individuals and limited companies with acceptable properties including, standard houses, flats & studios (including those with shorter leases), high rise blocks, plus houses in multiple occupation (HMOs) and Multi Unit blocks of up to six units.
In addition, Quantum has reduced rates on the single unit, multi unit and specialist ranges by up to 0.40%, while the ex-pat and foreign national range has seen reductions of up to 1.3%.
The QML Pro range which caters for nonstandard property construction and specialist tenancies has also been reduced by up to 0.70%.
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 5-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 ICR’s, 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”.
Gindy Mathoon, from mortgage broker Create Finance, added: “Having worked with Quantum Mortgages for a while now, it’s not surprising to see them providing more options for the challenges landlords face.
“The high fee, lower rate option has helped many of our clients, however, it is not suitable for all, including for example, higher rate taxpayers who hold properties in their own name and must satisfy higher ICR’s of up to 145%”
“This lower ICR requirement, coupled with Quantum Mortgages’ unique criteria proposition, allows us to offer both new and existing professional landlord clients a solution to most of their finance needs”.
