Buy-to-let mortgages given the Works

The Mortgage Works has launched a new buy-to-let mortgage at 5.99 per cent that can be fixed for a choice of two, three, or five years.

09:23 18 June 2004

The Mortgage Works has launched a new buy-to-let mortgage at 5.99 per cent that can be fixed for a choice of two, three, or five years.

Borrowers can also use a sliding LTV scale to determine rental income requirements. This means that a property's equity directly determines the income level needed to support the loan.

For example, LTV's of 65 per cent and under need only 100 per cent coverage of rental income based on mortgage payment of Bank Base Rate plus 1.45 per cent interest only.

Associate director for The Mortgage Works, Paul Howard says: "Due to rising interest rates, more and more landlords are choosing longer term fixed rates and we can now give them this product at the same price as a short fix."

He continued by saying: "We expect a lot of demand for this product. However, possibly the biggest difficulty in the Buy-to-Let market at present, is passing the rental income test which most lenders apply."

Talking about the scale, Mr Howard said: "We have come up with a unique method of easing this problem with the introduction of our 'sliding LTV scale'. Essentially, the more equity you put into the property the lower the rental income needs to be to justify the loan required."

The sliding scale works out as follows: 75 per cent requires a rental income ratio of 120 per cent, and 80 per cent LTV needs a higher rate of 130 per cent.