Paragon’s new five-year fixed-rate BTL mortgages are a rarity in the market because they come with no product fees. This is a significant advantage for landlords, as it means they can save on the initial costs often associated with securing a mortgage.

The interest rates for these mortgages begin at a competitive 5.80%. However, it’s important to note that these rates are subject to the value of the loan against the property’s worth, known as the loan-to-value (LTV) rate, which in this case is up to 70%.

Special Focus on Green Mortgages

Paragon is also placing a special emphasis on green mortgages. These are for properties with an Energy Performance Certificate (EPC) rating of A, B, or C – essentially, properties that are more energy-efficient. The starting rate of 5.80% is particularly aimed at these greener investments.

Higher Rates for Specific Properties

Landlords who are looking to invest in Houses in Multiple Occupation (HMOs) or Multi-Unit Blocks will face slightly higher rates, starting from 6.05%. This reflects the often higher risk and management needs associated with these types of properties.

Coverage Ratios and Eligibility

The interest coverage ratios, which help determine how easily a borrower can pay off the interest on a mortgage from the rental income, are calculated based on these initial rates. It’s also worth noting that these mortgage products are available to landlords applying through both limited company structures and personal names, covering a broad spectrum of investors in England, Scotland, and Wales.

Cashback Offer

To sweeten the deal, Paragon is offering £750 cashback on selected products. This cashback can be a real boon, especially when it comes to covering additional costs like legal fees.

Insight from the Inside

Louisa Sedgwick, the commercial director at Paragon Bank, sheds light on the rationale behind this move. She acknowledges that while the starting rate of 5.80% might not be ideal for every borrower, the absence of product fees and the addition of cashback offers make these mortgages particularly appealing for those investing in higher-value properties.

Sedgwick also points out the recent drop in swap rates, suggesting a stabilising mortgage market. This stability is what has enabled Paragon to adjust its range and make its products more attractive to landlords.