Suffolk Building Society has launched new mortgage products aimed at private landlords who are planning refurbishments, such as a new bathroom or kitchen.
The new ‘light refurb’ mortgage will base the rental calculation on the property’s estimated rental income after the work has been completed and not on its current rental value. This will potentially allow landlords to borrow more funds. This estimated rental amount will be provided by a third-party valuer and will take into account similar properties of comparable size, location and condition.
Suffolk Building Society will permit landlords six months to complete the renovation work on the property before it is advertised to let.
Applicants will need to evidence:
- sufficient savings to cover the first six months of mortgage repayments (while no tenant is in place)
- plans/costings for the intended work
- the capital to complete the refurbishments (if this is not being financed by the mortgage).
New Buy to Let Light Refurbishment product
- Available for purchase and remortgage
- 2-year discount deal at 5.89% (SVR minus 2.80%)
- 2-year fixed deal at 6.14%
- 5-year fixed deal at 5.79%
- All three have a maximum LTV of 80
- Minimum loan size of £75k, a maximum loan size of £1m
- Application fee of £199 and a completion fee of £999.
Mortgage brokers and their clients should be aware that the Society’s standard BTL criteria apply. This means the new products are only available to landlords who own up to three BTL properties, who have a minimum income of £25k, and where the anticipated rental income covers 145% of the monthly mortgage payment stressed at the Product Rate +2% or a minimum rate of 5.5%.
These products are not suitable for properties that are uninhabitable at the time of initial purchase, require structural work, or those requiring longer than six months’ worth of refurbishment.
Andrew Sadler, Key Account Manager, Suffolk Building Society said: “We’re delighted to provide an alternative solution to landlords who may have previously relied on bridging finance or second charge loans to make refurbishments.
“We’ve supported non-portfolio landlords for many years. What we can now offer is finance for light refurbishments. Affordability is based on the estimated future rental income on the newly-refurbished property, potentially boosting the maximum loan. The new products also go some way to improving the condition of private rental housing stock.
“In offering this mortgage, we will be drawing on the Society’s specialist manual underwriting capability which allows us to consider each mortgage application on its own merits.”