Pepper Homeloans has launched a buy-to-let 5-year fixed-rate mortgage of 2.98 per cent with a rental calculation based on the pay rate.
The specialist lender’s offer has a maximum loan-to-value of 75 per cent, with a minimum loan size of £25,001 and a maximum size of £1m.
The product comes with a rental calculation of 140 per cent x pay rate - the interest rate applied to the mortgage to calculate monthly payments - a completion fee of 1.75 per cent and free legals on all remortgages.
It also has early repayment charges of 4 per cent in the first two years, 3 per cent in the following two and 2 per cent in the final year.
The product is available on Pepper NP1 products to applicants with no county court judgements or missed payments in the past 36 months and no arrears in the past 6 months.
Rob Barnard, sales director of Pepper Homeloans, said: “Our research indicates that this product will typically appeal to investors who are seeking capital growth over a 5-year period.
“The pay rate rental calculation also means landlords can borrow more, providing them with a significant benefit.
“With a rate of just 2.98 per cent, a minimum loan size of £25,001 and free legals on remortgages, this is a very attractive package which landlords could see as an ideal opportunity to refinance their portfolio.”
Matthew Fleming-Duffy, director at Bournemouth-based Cherry Finance, described the deal as “the right message to send to landlords”.
“That is pretty much market-leading,” he continued. “If you look at the rate and start thinking about reversion rates, it is pretty much in the top five or top ten products.
“It is very competitive in terms of pricing. The rental calculation is really good and makes sense. I am a great fan of stability – particularly in the times we are in at the moment. Five years of stability for an individual is a very positive thing.”
simon.allin@ft.com
