11 March 2004
Platform announces new Buy to Let rental
calculation
- Offering more borrowers the opportunity to invest
-
Platform, the "one-stop" intermediary lender of
Britannia Building Society, has revised the way it calculates
rental income by using the initial pay rate rather than the
reversionary rate on products lasting five years or more. With
Platform’s core 5 year tracker loan at BBR + 0.90% (currently
4.90%), £115 less rental income per month is now needed to service
a £100,000 loan, or alternatively an extra £20,000 can be borrowed
for the same rent.
The new calculation method will help buy-to-let borrowers in
areas like the south-east where rental values have fallen and house
prices have risen, making it harder to achieve rental yields that
will cover the required mortgage repayments. Following this change,
intermediaries can now help clients in higher property price areas
and have the extra ability to raise an additional £10,000 for every
£50,000 borrowed.
The new 5 year tracker product uses the pay rate, rather than
the reversionary rate, to calculate repayments, giving borrowers
greater flexibility. The examples below show the impact this has on
rental income required to secure the loan:
- £100,000 @ 5.95% (reversionary rate) -
£645 per month rental needed
- £100,000 @ 4.90% (new pay rate) - £530 per
month rental needed
- £120,000 @ 4.90% (new pay rate) - £637 per
month rental needed
Platform has also introduced two special lifetime trackers via a
number of its mortgage club and network partnerships, which
likewise benefit from using the pay rate. Rate start from BBR +
0.99% for the lifetime of the loan.
Guy Batchelor, Sales and Marketing Director at Platform,
commented:
"This change to our rental calculation method further confirms
Platform’s role as a major player in the buy-to-let market. We have
introduced the changes in response to feedback from intermediaries
who are dealing with buy-to-let borrowers particularly in areas
where the ratio between rental income and amounts borrowed has
narrowed. Our new improved method of calculation means that they
will now be able to offer Platform’s products to a wider group of
clients than ever before."
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