14:07 PM, 30th January 2019, About 2 years ago
We had a very positive meeting yesterday with one of the lenders who can do post BICT incorporation refinancing. Their product offering is soon to become even more competitive in the wider BTL market.
They are reducing their pricing by 0.2% across the entire BTL range as of 1st Feb.
Their five year fixed rate as of 1st February 2019 will be 3.39% with a lenders fee of 1.25%, with stress rate testing at 125% @ 3.39%.
This should help most people achieve 75% LTV when refinancing.
Landlords who have incorporated their rental property business using the BICT structure have done so in order to retain competitive mortgages terms and/or avoid or defer the costs of refinancing. However, it is almost inevitable that refinancing will need to be considered at some point
3.39% fixed for five years.
Loans are stress tested at 125% interest cover using the 3.39% pay rate.
This means affordability is calculated based on a maximum of 283.19 times the monthly rent, providing the maximum LTV is not exceeded for individual applications. This is not to be confused with the general stress testing criteria used by their underwriters to consider the viability of the business as a whole, which applies a stress test of 125% interest cover assuming a 5% notional rate. On a simplified basis, this means that the maximum amount of funding the company can have as a whole, including mortgages with other lenders, is restricted to 192 times monthly rent.
The lender’s arrangement fee is 1.25% of the advance and can be added to the loan. Early Repayment Charges (“ERC’s”) are 4% in the first two years, 3% in years three and four, then 2% in the final year of the fixed rate. Thereafter, there are no penalties.
Interest only terms are up to 25 years and the product is available in England and Wales only.
The minimum property value inside London £150,000 or for properties outside London the minimum value figure is £75,000.
The maximum LTV on single loans up to £500,000 is 75%. Thereafter, LTV is restricted to 70% of value if the mortgage amount required exceeds £500,000 and up to £1,000,000, then 60% where mortgages on each property are between £1,000,000 and £1,500,000. Thereafter, the maximum LTV for each mortgage is 50% LTV and the maximum single loan is £3,000,000.
For assistance with this or any other type of property and commercial finance please do not hesitate to contact me and my team using the form below: