West One has launched a new range of limited edition products with enhanced debt service coverage ratio criteria in a bid to help landlords impacted by rising interest rates achieve bigger loan sizes.
The range is aimed at high-quality borrowers who are locked out of the market or cannot borrow as much as they could 12 months ago as a result of rapidly rising mortgage rates.
Each product features a lower debt service coverage ratio (DSCR) of 100% compared to the usual 125%.
The products featured in the new range include:
Despite the products carrying higher rates that others available in West One’s catalogue, the lender said the lower DSCR requirement means landlords can borrow much more.
“The increased leverage available is further enhanced for HMO/MUFB and Higher rate taxpayers where an increased rental stress ordinarily applies,” West One said in a statement.
“For example, on a property yielding 3.5-4%, the maximum LTV a landlord could achieve at an interest rate of 5.5% at 125% DSCR would be around 50%.
“However, on the new 100% DSCR range, the maximum LTV would be 57%, or potentially tens of thousands of pounds more depending on the value of the property,” it continued.
Separately, the lender has also launched a series of limited-edition fixes that carry lower rates and higher fees in order to help borrowers maximise loan size and affordability.
The range of two and five-year fixed-rate products are available on standard and specialist properties starting at 5.09%.
Andrew Ferguson, managing director of BTL at West One (pictured above), remarked: “Meeting a lender’s debt service coverage ratio requirements is the number one challenge facing landlords at the moment.
“Base rate rises coupled with market volatility have shifted rates upwards of 5.5%.
“However, in many parts of the country yields haven’t yet caught up, leaving many high-quality borrowers with limited options upon product maturity other than to accept high reversion rates or inject personal cash into the transaction to facilitate the remortgage.
“By launching our new limited edition enhanced DSCR range, we hope to help brokers’ clients meet this challenge and to offer them the finance they need.
“However, this doesn’t mean we are dropping our standard. In order to protect borrowers and to maintain the quality of our lending book, landlords will still have to go through the same bespoke and rigorous underwriting process they always do.”
