Paragon cuts its BTL mortgage rates and relaxes lending criteria

Paragon Bank has announced a series of changes to its buy to let mortgage products, including rate reductions, term extensions and criteria adjustments.

The bank has lowered its five-year fixed-rate buy to let mortgages by up to 0.70%, depending on the property type and energy efficiency rating.

Landlords can now secure a five-year fix at 4.50% with a 5% fee for single self-contained properties, or 4.45% for properties with an EPC rating of A-C.

For HMOs and MUBs, the rate is 4.70%.

‘Great to get the year off to a positive start’

Paragon’s commercial director, Louisa Sedgwick, said: “It’s great to get the year off to a positive start by taking up to 70bps off our 75% LTV five-year fixed-rate mortgages.

“With a mix of 5% and nil fee options, some with £750 cashback, we’re aiming to offer products that work for more landlords.”

She added: “We’ve listened to brokers who have told us that the most important consideration for their clients when sourcing mortgages is affordability so calculating ICRs at a lower rate will help with this.

“Additionally, we have eased some of our criteria across the maximum loan term and minimum experience for HMO and MUB applications.”

Interest coverage ratios calculated based on the initial rates

The bank has also reduced its reference rate from 5.50% to 5.00%, which means that the interest coverage ratios (ICR) are calculated based on the initial rates, except for products with rates below 5.00%, where the ICR is still 5.00%.

In addition, Paragon has increased its maximum loan term from 25 to 35 years, giving landlords more flexibility and affordability.

The bank has also lowered the minimum experience requirement for HMO and MUB applications from three years to two years, making it easier for landlords to diversify their portfolios.

Other rate cuts include a 0.55% reduction on a five-year fixed-rate product with no fee and £750 cashback, which is now available at 5.39% for single self-contained properties, or 5.34% for properties with an EPC rating of C or above. For HMOs and MUBs, the rate is 5.59%.

These products are available for landlords who apply through limited company structures or in personal name, at up to 75% loan-to-value (LTV), in England, Scotland and Wales.

Two more BTL lenders have cut mortgage rates

• Landbay has started the new year by reducing rates on all its standard five-year fixed rate products, with some rates dropping by up to 0.46%. The products now begin at 4.39%, and offer 55%, 65% and 75% LTVS. They use Landbay’s flexible fee structure, which varies from 3% to 6% to suit different budgets. The lender has also announced that all five-year products have payrate stress tests, and a maximum loan amount of £2 million – based on the LTV. Fixed-fee products are still an option for smaller loans.
• Accord Mortgages has launched a new buy to let product range with lower rates on selected two, three and five-year fixed-rate products. The lender has cut rates by up to 0.50% on selected two-year fixed-rate products, by up to 0.70% on selected three-year fixed-rate products, and by up to 0.95% on selected five-year fixed-rate products. The new range is available from today and includes products for purchase and remortgage, with a choice of fee and cashback options.
• Penrith Building Society has announced that it will waive mortgage application fees for residential and buy to let customers for a limited time. The fee-free offer applies to new and existing customers, including further advances, who submit their applications between 8 January and 31 March.

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