Virgin Money provide remortgaging landlords with bigger mortgages

by Aaron Strutt

Jan 21 2017

Virgin Money for Intermediaries has introduced a “balance swap” mortgage enabling landlords to remortgage more easily.

Following the significant changes implemented by the Prudential Regulation Authority, mortgage lenders have tightened the calculations they use to work out maximum buy-to-let loan sizes.

When landlords purchase a property, Virgin Money uses a rental income cover of 145% of the mortgage interest and this will be calculated using a notional rate of 5.5%. Although, when they opt for a five-year fixed rate the notional rate drops to 4.74%.

When landlords remortgage to Virgin with a straight balance swap and the loan amount stays the same, the bank’s old rental calculation of 125% applies using the previous stress test rate of 5.74%.

Aaron Strutt, product director at Trinity Financial, says: “If a property generates £1,500 each month, Virgin would offer £225,705 on it two and three-year rates or £261,894 on its five-year fix. For clients looking to remortgage from another lender and lock into a two-year fixed or tracker, the old calculation enables them to borrow £250,871.

“Some landlords will find it hard to switch to another bank or building society when their mortgage rate expires becuase they market has changed so much. Unfortunately, some lenders do not offer existing customers competitively priced deals and they may be stuck on a high reversion rate.”

For help to secure a more generous buy-to-let mortgage, call Trinity Financial on 020 7016 0790.