80% buy-to-let mortgages from TMW are back. Yes, you read that correctly. TMW, the buy-to-let arm of Nationwide Building Society have announced the re-introduction of 80% LTV buy-to-let loans to their product offerings, as well as several other positive changes to their mortgage criteria. After a few weeks of constant rate increases across banks and building societies, these new changes from TMW come as a surprise and a very welcome change.
80% LTV Buy-To-Let Mortgages From TMW
So, what exactly does this mean? Recent news from mortgage lenders has been that interest rates have been increasing, meaning that repaying loans has become more expensive. But not many lenders have altered their loan to values (the maximum percentage of a property that you are allowed to mortgage). Normally when there is instability in the mortgage market, lenders will do three things.
- Increase interest rates to ensure that they still make a profit and to discourage people who can’t afford to pay their high loans back, which they have.
- Make changes to affordability thresholds to limit that amount of people borrowing and the amount of money they can borrow.
- Reduce the maximum mortgage loan to value, to reduce the amount of money they are lending on a single property and decrease the risk factor of the money that they are lending.
When it comes to loan to values, higher loan to values like 80%, 85%, 90% and 95% loans are much higher risk to the lender because if something goes wrong with the property or the borrower in the future, the lender will have a lot of their money tied up in the property. Therefore, when there is financial turmoil in the economy, lenders will offer incentives and preferential rates for borrowers putting more money into the property themselves and will often remove the higher LTV products that they offer. With buy-to-let loans, most lenders will require a minimum of 25% deposit (75% LTV) because of this, and many lenders have increased this even more over the last few years due to covid and the ongoing financial crisis.
20% Deposit Buy-To-Let
However, it seems that TMW are breaking the BTL lender mould by re-introducing 80% LTV buy-to-let mortgages to their offerings. This means that existing buy-to-let borrowers or people seeking new buy-to-let mortgages from TMW can mortgage a property up to 80% of the full value. TMW have specifically said:
‘We’re reintroducing 80% LTV products for new business applications. Available across our standard Buy to Let, Limited Company and Let to Buy ranges, these products will be eligible for properties with an EPC rating of A to C. The range will include Purchase, Remortgage and Further Advance products. It will also offer a choice of 2 and 5 year fixed rate terms, as well as different fee and incentive options.’
The rates for these specific 80% LTV buy-to-let products have not yet been announced, but if you secure your mortgage through an Oportfolio advisor, they will be able to explore these rates for you and get you the best available rate.
Changes To Buy-To-Let Affordability
As well as re-introducing 80% Buy-To-Let loans, TMW have also made some changes to their general affordability for buy to let mortgages. Here is a breakdown of the changes directly from TMW.
Firstly, we’ve simplified our stress rates, as you can see in the table below:
We’ve also updated our Interest Cover Ratios (ICR):
On the whole these changes mean that we’ll be able to offer increased maximum borrowing where the product term is 5 years or more, or if it is a like-for-like remortgage. But does also mean that maximum borrowing will be less for terms under 5 years.
We’re reducing our overall Portfolio stress rate to 4.50%:
Speak To A Specialist Buy-To-Let Mortgage Broker
If you currently own a buy-to-let or are thinking of getting one, now is a great time to be a landlord. Rents are up and properties are still valuable. If you need to finance your property with a mortgage, please give our team of mortgage advisors a call today to see how we can help you to get the best possible rate.