Quantum Mortgages is introducing a groundbreaking product to assist landlords who find themselves trapped as “mortgage prisoners” and unable to remortgage due to high rental income margins. The 100% interest cover ratio loan will be available starting from tomorrow (29 September) and aims to alleviate the challenges faced by these landlords.

This new loan is applicable to both single-unit and multi-unit properties, with a loan to value ratio of up to 70%. It enables borrowers with a clean two-year repayment history to refinance, even if the rental income of the property falls short of the typical 125% income coverage requirements.

Notably, in cases where there is no additional borrowing apart from refinance costs, the minimum interest cover ratio requirements will be reduced to 100%. This means that the rental income only needs to cover the new mortgage payment, providing greater flexibility for landlords.

The interest rates for the 100% interest cover ratio calculation product start at 5.99% and borrowers will also receive a refund on the valuation fee. The loan is available to both individuals and limited companies, encompassing standard houses, flats, studios, high rise blocks, houses in multiple occupation, and multi-unit blocks of up to six units.

Furthermore, Quantum Mortgages has announced rate reductions of up to 40 basis points across its single-unit, multi-unit, and specialist ranges. For its expat and foreign national range, the rate reduction is up to 1.3%. The QML Pro range, catering to non-standard property construction and specialist tenancies, has seen a rate cut of up to 70 basis points.

Jason Neale, the managing director of Quantum Mortgages, emphasizes the motivation behind introducing this alternative option for landlords facing difficulties. He highlights that many portfolios currently include loans at high variable or reversionary rates, often reaching 10%, making it impossible to refinance under today’s interest rates. Neale explains that while some lenders address this challenge by increasing product fees, Quantum Mortgages aims to provide an alternative option that minimizes the erosion of landlords’ equity.

FAQ:

1. What is a mortgage prisoner?
   A mortgage prisoner refers to a borrower who is unable to remortgage or switch lenders due to various factors, such as changes in lending criteria, reduced market availability, or financial circumstances.
2. What is an interest cover ratio?
   The interest cover ratio is a financial metric used by lenders to assess the borrower’s ability to cover mortgage interest payments with rental income. It is typically calculated by dividing the net operating income (rental income minus expenses) by the annual mortgage interest payment.
3. What is loan to value (LTV)?
   Loan to value (LTV) is a ratio that compares the amount of the loan to the appraised value of the property. It is calculated by dividing the loan amount by the property value and is expressed as a percentage.

Sources:
– Quantum Mortgages: quantummortgages.net