Suffolk Building Society has rolled out a new range of mortgage products tailored for private landlords embarking on refurbishment projects, such as upgrading bathrooms or kitchens. The innovative ‘light refurb’ mortgage employs a unique approach, determining rental eligibility based on the property’s projected rental income post-renovation rather than its current value. This forward-looking assessment has the potential to empower landlords with increased borrowing capacity, as it considers the property’s estimated rental value after the refurbishment, taking into account factors like size, location, and condition. This evaluation is conducted by third-party valuers with expertise in assessing comparable properties.
The ‘light refurb’ mortgage from Suffolk Building Society introduces a strategic shift in the lending landscape for landlords, offering a dynamic solution that aligns borrowing capacity with the property’s enhanced rental potential following renovations. By focusing on future rental income, this product provides landlords with greater financial flexibility, encouraging property improvements that can potentially boost overall property value and rental returns. The involvement of third-party valuers ensures an impartial evaluation, incorporating key factors that influence rental values in the local market, fostering a more accurate and reliable basis for assessing post-refurbishment rental income.
Suffolk Building Society has launched a ‘light refurb’ mortgage, providing landlords with a unique opportunity to complete property renovations within a six-month period before putting the residence on the rental market. To qualify, applicants must showcase sufficient savings to cover the initial six months of mortgage repayments in the absence of a tenant. Additionally, they are required to present detailed plans and costings for the proposed refurbishments and provide evidence of the capital needed for the renovations, especially if not covered by the mortgage.
This innovative mortgage product is available for both purchase and remortgage scenarios, offering flexibility with various options. Landlords can choose from a two-year discount deal at 5.89%, a two-year fixed deal at 6.14%, or a five-year fixed deal at 5.79%. These choices empower landlords with flexibility and financial options tailored to their preferences and financial goals, making it a valuable addition to the market for property investors considering refurbishment projects.
All three mortgage products offered by Suffolk Building Society share common features, including a maximum Loan-to-Value (LTV) ratio of 80%, a minimum loan size of £75,000, and a maximum loan size capped at £1 million. Applicants for these products are subject to an application fee of £199 and a completion fee of £999.
These mortgage offerings are exclusively accessible to landlords who own up to three buy-to-let properties, maintain a minimum income of £25,000, and ensure that the anticipated rental income is equivalent to 145% of the monthly mortgage payment, stressed at the Product Rate plus 2.0%, or a minimum rate of 5.5%. It’s important to note that these products are not suitable for properties that are uninhabitable at the time of purchase, necessitate structural work, or require refurbishments exceeding six months.
The spokesperson from the building society underscored the institution’s extensive history of backing non-portfolio landlords and introduced a tailored financing solution aimed at facilitating light refurbishments. In a departure from conventional assessments, the affordability of these mortgage products hinges on the anticipated future rental income from the property post-renovation, offering landlords the potential to secure more substantial loans. This innovative approach not only addresses immediate financial needs but also aligns with the broader objective of improving the overall condition of privately rented housing.
As part of this mortgage offering, the building society leverages its specialized manual underwriting capabilities, ensuring a meticulous evaluation of each application on an individual basis. This personalized scrutiny allows for a nuanced understanding of the unique circumstances surrounding each property, enabling the society to provide tailored financial solutions that meet the specific requirements of landlords engaged in light refurbishments. This commitment to bespoke evaluation contributes to the effectiveness and relevance of the mortgage products offered, reflecting the society’s dedication to supporting landlords in their property endeavors.
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