Paragon makes B2L easier

Paragon is to use a reference rate of 5% to calculate clients&#39 rental incomes, which experts say will inc-rease the chances of investors getting accepted for a buy-to-let deal with the lender.

Previously Paragon was using its SVR to calculate rental income, which must be 130% of monthly mortgage payments.

With a mortgage of £100,000 at a three-year fixed rate of 5.99%, the cost on an interest-only basis is £499.16 per month.

On the old basis the rental calculation would have been current LIBOR plus 1.50% which would be 5.562%. As the rental income must be 130% of the monthly payments, the client would need to accumulate £612 in rent per month. On the new reference rate of 5%, monthly rental income only needs to be £541.

Paragon will also pay an extra 0.5% proc fee for cases for new borrowers placed with it between now and June that complete by the end of September.

In addition, every application placed through Mortgage Intelligence now brings with it a chance to win a ticket to the England vs France Euro 2004 football match on June 13.

Sally Laker, managing director of MI, says: “The old calculation meant that even though clients could afford the mortgage, rental incomes would not stack up so deals were being thrown out of the window.”

Paragon has also launched a range of products including a semi-exclusive discount deal at LIBOR plus 1.25% for five years whereby the rate reverts to LIBOR plus 1.5% after the discount period; a three-year fix at 5.95% and a five-year fix at 5.99%. The discount is open to new borrowers only while the fixed rates are available to all borrowers.