Borrow more on a buy to let mortgage with one of the best rental calculation products on the market
Which lender has the Best rental calculation for Buy to Let Mortgages? The answer is things change all the time but below is one of the best products currently on the Buy to Let Market to help with purchase and remortgages. As I have previously posted Buy to let mortgage products have had to become more inventive since the Prudential Regulation Authority (PRA) review in January this year, to make mortgages fit on rental calculations. Competition is fierce to win buy to let business as taxation changes have slowed the market, and products with the maximum rental calculations have become the battle ground.
Foundation Homeloans are latest Buy to Let Lender to press their foot down on the accelerator with the launch of a 3.29% five year fixed rate, with the rental coverage based on the pay rate to maximise gearing potential.
How does this pay out in practise? Well the market generally seems to be adopting 145% coverage based on a notional interest rate of 5.5% following the PRA’s findings, so below is an example of the difference:
Best rental calculation for buy to let mortgage
Borrowing potential Table
[ezcol_1quarter]Rental per calendar month[/ezcol_1quarter] [ezcol_1quarter]Typical market position
145% @ 5.50%[/ezcol_1quarter] [ezcol_1quarter]Foundation Homeloans
145% @ 3.29%[/ezcol_1quarter] [ezcol_1quarter_end]Additional borrowing potential[/ezcol_1quarter_end]
[ezcol_1quarter]£500[/ezcol_1quarter] [ezcol_1quarter]£75,235[/ezcol_1quarter] [ezcol_1quarter]£125,775[/ezcol_1quarter] [ezcol_1quarter_end]£50,540[/ezcol_1quarter_end]
[ezcol_1quarter]£750[/ezcol_1quarter] [ezcol_1quarter]£112,850[/ezcol_1quarter] [ezcol_1quarter]£188,650[/ezcol_1quarter] [ezcol_1quarter_end]£75,800[/ezcol_1quarter_end]
[ezcol_1quarter]£1,000[/ezcol_1quarter] [ezcol_1quarter]£150,470[/ezcol_1quarter] [ezcol_1quarter]£251,550[/ezcol_1quarter] [ezcol_1quarter_end]£101,080[/ezcol_1quarter_end]
[ezcol_1quarter]£1,500[/ezcol_1quarter] [ezcol_1quarter]£225,770[/ezcol_1quarter] [ezcol_1quarter]£377,315[/ezcol_1quarter] [ezcol_1quarter_end]£151,545[/ezcol_1quarter_end]
[ezcol_1quarter]£2,000[/ezcol_1quarter] [ezcol_1quarter]£300,940[/ezcol_1quarter] [ezcol_1quarter]£503,100[/ezcol_1quarter] [ezcol_1quarter_end]£202,160[/ezcol_1quarter_end]
The rental further improves if the property is bought inside a limited company framework as the rental coverage factor drops to 125%.
Example Product Rate and Fees – Best Buy to Let Mortgage Rental Calculation Coverage
[ezcol_1fifth]Initial Rate: 3.29%[/ezcol_1fifth] [ezcol_1fifth]Subsequent: 4.79%[/ezcol_1fifth] [ezcol_3fifth_end]The overall cost for comparison 4.62% APRC[/ezcol_3fifth_end]
The total amount you must pay back, including the amount borrowed is £419,264
Features / description: Lender applies a rental cover of 145% at the payrate to maximise your borrowing potential.
| Type and initial benefit period | Fixed until 30/04/2019 |
| Minimum deposit / equity: | 35% |
| Valuation fee | £370 |
| Booking fee | £125 |
| Lender arrangement | £3900 |
| Telegraphic transfer / CHAPS fee | £35 |
| Legal fee | £750 |
| Early repayment charge | 5/4/3/2/1% of the amount repaid in the fixed period |
Niche Advice offers appropriate advice on buy to lets including ideas on how to get the maximum mortgage so if your looking at the Best rental calculation on buy to let mortgages please. For more information complete the Online form under our Contact section on this website or call T: 020 7993 2044.
Any property used as security, which may include your home. may be repossessed if you do not keep up repayments on your mortgage
Important Information
Residential and Buy to Let Mortgages
Rates current as at 21/06/2017 . The overall cost for comparison is based on a purchase price of £300,000 over a 25 year term. The Right-to-Buy example is based on a discounted purchase price of £150,000. Repayment for Residential and Interest only for Buy-to-let (unless otherwise specified). Eligibilty will depend on your own personal circumstances.
KEY – ERC = Main early repayment charge.
The purpose of this web is for information only and is based on a fictitious illustrative scenario. It does not constitute a Mortgage Offer in any way.
It is essential that you seek independent mortgage advice as a suitable product will be based on your own individual circumstances. An interest rate should not be read in isolation, and you should refer to your personal key facts illustration and Mortgage Offers for full terms and conditions. If anything is unclear it should be discussed fully with both your mortgage and legal advisors before entering into a mortgage contract with the lender.
The information contained herein is based on research through the Trigold (IRESS UK) sourcing system. When first published to this site the data is normally 24 hours behind real time, and may or may not still be available.
A first charge over your property is required as security for the loan.
The formal mortgage offer of an advance will be subject to a valuation and other satisfactory references.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines. To get in contact with him please click here.
