Ipswich Building Society has launched two low-fee buy-to-let products aimed at borrowers looking to take out smaller loans of up to £150,000.
The lender is offering a two-year fix at 2.95 per cent and a five-year fix at 3.27 per cent, both of which are available up to a maximum loan-to-value (LTV) of 75 per cent and come with a completion fee charged at 0.5 per cent of the loan amount, and a £199 application fee.
Available for purchase and remortgage for direct applicants in England and Wales and via selected intermediary partners, the products have a minimum loan size of £75,000.
Ipswich hopes the products will be able to help so-called buy-to-let mortgage prisoners with other lenders looking to take advantage of the Prudential Regulation Authority’s transitional rules.
These rules enable remortgagors to transfer to other lenders using a rental income calculation at 125 per cent of mortgage pay rate instead of the 145 per cent required for new borrowers following regulatory changes.
The loans also benefit from the society’s 50 per cent fee-free overpayment facility, which enables borrowers to repay without penalty up to 50 per cent of their original loan amount while in the fixed rate period.
Richard Norrington chief executive of Ipswich Building Society, said: “We are continuing to offer competitive products in the buy-to-let market and are pleased to expand our existing range with two new products that will provide new options to those seeking a low loan deal.
“The smaller fee size is a further benefit, which will make the products more attractive to a new variety of borrowers including those remortgaging from other lenders and wishing to take advantage of transitional arrangements.”
Tony Silver, director at London-based White House Mortgages, commented: “The five-year product is spot on, but the two-year rate is too expensive. There are lower fees on the market, and they dictate whether a client will take the product.
“Fees can be absorbed. We are underwriting as to who will lend on this, then the lender’s pay rate once the fees have been added on.
“That [five-year] product might well work in Northampton, Manchester, Birmingham and other areas outside London, where if they get their pricing and underwriting right, they can do quite well.
“The problem with Ipswich is they don’t get the message out very often. They need to get the message out there.”
Mr Silver added that lenders such as Barclays, Woolwich and Natwest, which allow earned income top-up, are helping brokers and clients to deal with the PRA’s stricter underwriting rules.
simon.allin@ft.com
