CHL Mortgages, a specialist in the buy-to-let market, has revealed a significant reduction in its mortgage rates. The lender has cut its rates by up to 0.37%. But what does this look like in real terms?

• For Standard Properties: If you’re eyeing a standard property, two-year fixed rates have now become more affordable, starting at just 3.00%. And for those looking at the longer term, five-year fixed rates have been set to start from 4.35%.
• For HMOs and MUFBs: If your investment leans towards Houses in Multiple Occupation (HMO) or Multi-Unit Freehold Blocks (MUFB), there’s good news for you too. Two-year fixed rate products are now starting from 3.02%, and for a bit more stability, five-year rates begin at 4.42%.

Flexible Fees and LTVs

Understanding the lingo is crucial here. LTV, or Loan to Value, is a percentage that shows the size of your mortgage in relation to the value of the property. CHL Mortgages offers products with various fee options (2%, 5%, and 7%) and LTV bandings (55%, 65%, 70%, and 75%). This flexibility ensures you can find a mortgage that fits your investment needs and budget.

ICR Explained

The Income Coverage Ratio (ICR) is another term thrown around in the mortgage world. It’s a way lenders ensure you can cover the mortgage payments from your rental income. CHL Mortgages calculates ICR at the pay rate for five-year fixed rates and at the higher of 5.5% or the pay rate plus 2% for two-year fixed rates. Simply put, they’re making sure your investment is as safe as houses.

Why the Change?

Ross Turrell, the commercial director at CHL Mortgages, gives us a peek behind the curtain, “As we move ever closer to the point at which the Bank of England will reduce the base rate, we see improvements on the forward swap curves. As a result, we’re pleased to be able to reduce both two-year and five-year fixed rates, which in turn will offer more choice for brokers and the landlord community.”