Updating post from Reddit.
For over a year, Vida Bank has stood alone as the sole provider of 85% loan-to-value (LTV) mortgages for Buy-to-Let Landlords.
This week, however, Foundation has joined the fray, introducing much-needed competition that could benefit landlords seeking higher leverage. This entry is a welcome addition to the market, expanding options for property investors.
Both lenders now offer products tailored to individuals and limited companies, with minimum loan sizes of £50,000 for Vida and £100,000 for Foundation. The maximum loan size caps at £500,000 for each.
When comparing the two, Vida provides a lower mortgage rate but includes a percentage-based loan fee. In contrast, Foundation boasts zero application fees, though it comes with a higher interest rate. At first glance, this might make Foundation more appealing for larger loans, where the absence of fees could offset the elevated rate. However, landlords should note a key caveat: Foundation's maximum borrowing is constrained by stress testing at a higher rate, which may limit the overall loan amount available.
It's also important to highlight that Foundation's new entry into this market is somewhat limited. Unlike Vida, which extends 85% LTV options to Houses in Multiple Occupation (HMOs) and Multi-Unit Freehold Blocks (MUFBs), Foundation does not currently cover these property types.
Source: New 85% LTV BTL Mortgage: Foundation Boosts Competition for Landlords
Eye-watering interest rates.
Let alone rent reform on the horizon and no landlord help no thank you.
and fees.
haha I'll leave it thanks
I wouldn't be eager to jump on 85% LTV, but it's a means to an end, and if the numbers NET are more attractive, so be it.
However, the last time I checked, personal loans have an average APR of around 6%. So, if you're only releasing £ 10,000, it would seem silly to finance the whole mortgage debt at 6.49% if an unsecured £10k loan is an option.
Of course, an unsecured loan would be on a repayment basis, so higher overall payments would be required, and it would be based on personal income, not rental income.
For anyone that’s taken out a Btl mortgage recently, those fees aren’t that bad. I’d run the numbers on the higher interest rate but I wouldn’t immediately discount this
