CHL Mortgages has just rolled out significant cuts to their interest rates across the board in their buy-to-let range, starting from 21 May. This move marks a promising shift for landlords looking to save on mortgage costs, be it through standard buy-to-let or more specialised property types like small houses in multiple occupation (HMO) or multi-unit freehold blocks (MUFB).

The revised rates include reductions in both their 2-year and 5-year fixed-rate mortgages. For standard properties, the rates are now more appealing with 2-year fixed rates beginning at just 3.20%, and 5-year fixed rates at 4.55%.

For those investing in small HMOs (properties with up to six bedrooms) or MUFBs (properties consisting of up to six units), there are also beneficial changes. The rates for 2-year fixed mortgages have been adjusted to start at 3.22%, and 5-year fixed mortgages at 4.62%.

Flexible Fee and Loan Options

CHL’s refreshed mortgage range doesn’t just offer lower rates but also a variety of fee options to cater to different financing needs. Landlords can choose between mortgage products that come with fees of 2%, 3.5%, 5%, or even as high as 7%, depending on their preference and financial strategy.

Additionally, the mortgages are available with loan-to-value ratios (LTV) of up to 75%. This feature offers flexibility for landlords who may not want to tie up too much capital in one property or are looking to leverage their investment.

Eligibility and ICR Calculations

Both individual landlords and limited company landlords can access these new mortgage offers. CHL Mortgages calculates the Interest Coverage Ratio (ICR) using a specific formula. For 2-year fixed rates, the ICR is calculated as the higher of 5.5% or the pay rate plus 2%. For 5-year fixed rates, the calculation is based simply on the pay rate.

This tailored approach in calculating ICR means that landlords will be assessed based on their ability to cover mortgage payments under potentially higher interest scenarios, ensuring a safer investment for both the lender and the borrower.

Enhanced Affordability Checks

CHL Mortgages also incorporates blended ICR assessments. This method allows for adjustments based on each borrower’s tax status and their individual share of ownership, which can help in making the property investment more affordable.

Ross Turrell, the Commercial Director at CHL Mortgages, emphasised that the reduction in rates is a response to recent improvements in swap rates, aiming to keep CHL competitive in the market. He noted, “These reductions to both our 2-year and 5-year fixed rates will help brokers support their landlord clients in achieving the best deal.” This strategy not only benefits landlords by reducing their mortgage costs but also assists brokers in providing better services to their clients.