85% LTV buy to let is back!

85% LTV buy to let is back!

12:16 PM, 7th February 2011, About 14 years ago 2

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Somebody had to be first to do it but who would have expected it to be Kensington Mortgages?

The complete lack of competition from other lenders at these levels of exposure is reflected in the interest rate of 5.99% fixed for two years from the completion date, reverting to LIBOR plus 5% thereafter.

Applicants need to be able to prove earnings over £30,000 per annum and the scheme is restricted to three loans.  The minimum loan is £25,001 and the minimum property value is £90,000.

The lenders minimum interest cover is 120% meaning that up to 166.94 times monthly rent is the maximum loan or 85% of purchase price, whichever is the lower figure.

Lender fees are 2.5% added to the loan advance and an early repayment charge of 5% is payable on redemptions within the fixed rate period.

For further information visit Kensington Mortgages web-site or for advice on whether this product suits your requirements speak with a mortgage broker.  We will be happy to recommend a good broker if you need one.


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Mark Alexander - Founder of Property118

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12:37 PM, 7th February 2011, About 14 years ago

UPDATE - no remortgages accepted within 12 months of purchase.

Neil Patterson

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14:13 PM, 7th February 2011, About 14 years ago

This is a very exciting development for the BTL market, but I would urge caution and only consider such a product if I was struggling for cash and had a opportunity to buy a property with a VERY high yield. My rationale is this. The two year fixed rate will expire and revert to a volatile LIBOR just as interest rates are anticipated to start climbing again. I would stress test at 12.5% (maximum loan = 96 X monthly rent) to allow 20% of my rental income to be swallowed up in management fees, maintenance, insurance etc. and to allow for LIBOR going up to 5%. Either that or else I would need to be absolutely convinced of strong capital growth prospects during the two year fixed period as one possible exit (which I'm not) or have a very long term outlook and the ability to subsidise interest payments.

For people who are short on cash to put down as a deposit AND have a 10% plus yielding property AND have the ability to subsidise if interest rates go up but values don't, this product maybe the answer. However, how many people are likely to be in such a position? Not many and I suspect Kensington and their borrowers could well regret the day this product came onto the market in a couple of years time!

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