Benefits from rental calculations to fit on a 5 Year Fixed Buy to Let Mortgage with no early repayment charges throughout – Best of both worlds
I rarely pen about specific products but feel compelled to do so about the Accord Mortgages 5 Year Fixed Buy to Let Mortgage with no early repayment charges. How so? Well, since the Prudential Regulatory Authority – PRA rules were introduced a few years back, Mortgage Lenders have used 5 year fix rates to reduce rental calculation stress testing – all well and good – except the method and costs of bringing a five year fixed rate to the table have by and large been counteracted by early repayment charges in the fixed period – and investors, landlords and developers don’t generally want to be tied down.
They want their assets to be fluid and leveraged after refurb work has been carried out – this is why this 5 year fixed buy to let with no early repayment penalties ticks both boxes – and brings a smile to my face – as I can see the potential as a genuine alternative solution to expensive light refurbishment finance.
Accord Mortgages do offer mortgages to “portfolio” landlords but the background rental stress-test can make it hard to pass so I see this offering as more suited for landlords at the start of building up their assets, including first time landlords.
The property must be lettable, watertight and have a working kitchen and bathroom at the point of the Accord’s Surveyor visit, but they do not have to be “modern”, – which is important if you are looking to make home improvements. Accord Mortgages will expect the property to be tenanted from day one, so you will need to work around them, but once the works are completed, you are not tied in (as there are no early repayment charges). You are free to remortgage away and get an uplift on the increased value.
Another benefit of this product is clients do not need a minimum personal income to apply to this lender.
Unfortunately, Accord Mortgages does not offer buy to let mortgages for limited companies, and all Buy to Let products need to be in personal names with a maximum of two applicants.
Accord Mortgages 5 year fixed buy to let with no early repayment penalties – Rate Options
| Date analysed 5/5/2023 | 5 year fix with no early repayment penalties | ||
|---|---|---|---|
| 60% loan-to-value | 65% loan-to-value | 75% loan-to-value | |
| Initial rate | 5.13% | 5.17% | 5.20% |
| Subsequent reversionary rate | 7.49% | 7.49% | 7.49% |
| The total amount you must pay back, including the amount borrowed is | £497,971.00 | £539,633.38 | £622,561.44 |
| Overall cost of comparison APRC | 7.0% | 7.0% | 7.0% |
| Type and initial benefit period | Fixed rate until 31/08/2028 | Fixed rate until 31/08/2028 | Fixed rate until 31/08/2028 |
| Minimum percentage | 40% | 35% | 25% |
| Valuation fee | Free | Free | Free |
| Booking fee | £Nil | £Nil | £Nil |
| Lender product fee | £1,995 | £1,995 | £1,995 |
| Cashback | £250 | £250 | £250 |
| Lender name | Accord Mortgages | Accord Mortgages | Accord Mortgages |
| Main early repayment charge | £Nil | £Nil | £Nil |
| Admin fee on full repayment | £90 | £90 | £90 |
NOTES
- The comparison is based on an assumed purchase price of £300,000 over a 25 year mortgage term.
- It looks at the repayment method as “Interest only”.
- Eligibility will depend on your own personal circumstances. Not for Limited Companies -SPV
- Minimum property value £75,000.
- Background properties must collectively meet a minimum rental calculation of 145% interest coverage ratio (ICR) at a stressed rate of 5.5%.
Additional requirements for Portfolio Landlords
- Portfolio Landlords will be defined as those having 4 or more mortgaged BTL properties.
- Personal Statement of Assets.
- There is no limit to the total number of properties allowed in a portfolio. The maximum number of properties that can be mortgaged remains at 10.
* They don’t assess the LTV at the portfolio level.
Accord Mortgages 5 Year Fixed Buy to Let Mortgage with no early repayment charges – Rental requirement
| Purchase Price | Mortgage (75% loan-to-value) | Monthly rental needed (lower rate taxpayer) | Monthly rental needed (higher rate taxpayer) |
|---|---|---|---|
| £100,000 | £75,000 | £485 | £562 |
| £150,000 | £112,500 | £727 | £843 |
| £200,000 | £150,000 | £969 | £1,124 |
| £300,000 | £225,000 | £1,454 | £1,686 |
| £450,000 | £337,500 | £2,180 | £2,529 |
Accords existing rental calculations will apply for new borrowing. All background properties must collectively meet a minimum rental calculation of 145% interest coverage ratio (ICR) at a stressed rate of 5.5%.
They are also only accessed by the intermediary channel, which means you will need to seek professional advice from a qualified mortgage advisor to be able to get access to this product. It’s also vital they evaluate your situation because this product may not be suitable for all and careful consideration needs to be given at all times.
So if you’re looking for a 5 Year Fixed Buy to Let Mortgage with no early repayment charges -ERC , please call us on T: 020 7993 2044 or complete the online enquiry form on this page.
