Mortgages 

Foundation Home Loans launches three-year fix

Foundation Home Loans launches three-year fix

Foundation Home Loans has launched a three-year fixed rate mortgage to its buy-to-let portfolio, in an effort to address a perceived gap in the market.

The mortgage is tailored to landlords with clean credit records and those financing a Houses in Multiple Occupation (HMO) or Multi Unit Block (MUB) purchase.

Available exclusively through intermediaries to both individuals and limited companies, the product's rates begin at 3.19 per cent for up to 65 per cent loan-to-value (LTV); 3.69 per cent for up to 75 per cent LTV for borrowers funding HMOs; and 3.79 per cent for up to 75 per cent LTV for a MUB purchase.

Andrew Ferguson, commercial director at Foundation Home Loans, said there was a lack of three-year fixed rate products catering for landlords in this market.

He said: "With ongoing uncertainty in the market and the full effect of the buy-to-let tax changes materialising in 2021, we are confident these rates will give landlords an alternative solution to two and five-year deals, particularly as there is a real lack of three-year rates in the market.

"The products cater for all property types and have a competitive fee. We also believe that these rates will be popular amongst limited company clients, where we have been seeing an increase in demand."

The buy-to-let market has seen landlords increasingly transfer properties to limited companies in an attempt to navigate the squeeze on profitability caused by a number of tax and regulatory changes in recent years.

In April 2016 the government added a 3 percentage point stamp duty surcharge for private landlords and a year later phased in tax relief on mortgage interest for higher rate taxpayers. 

Buy-to-let borrowers are also now subject to more stringent affordability testing under the Prudential Regulation Authority's tightened underwriting rules introduced in 2017.

rachel.addison@ft.com

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