GMAC-RFC has unveiled a new buy-to-let tracker that it predicts will force other lenders to respond to or risk losing market share.
The lending giant has launched the product in response to the widening gap between purchase prices and achievable rents, which GMAC-RFC says is increasingly becoming a problem for landlords.
The buy-to-let product offers investors a lower rate of interest than competitors and existing products in the market, and requires 27% less rental income enabling the landlord to purchase or remortgage more properties with GMAC-RFC.
Jeff Knight, director of marketing at GMAC-RFC says: “The new buy-to-let product offers a solution to the property investor in the current environment where mortgage rates may rise but rental rates may not.
“This product offers a lower rate of interest than competitors and existing products and an extremely low rental requirement.”
Knight adds: “With a loan of £130,000, landlords could save £147 per month.
“To put this into perspective, for a landlord with seven properties at this average loan size, they could save £12,375.72 per year against the next best rate product currently available.
“For those in the South-East and Central London area, they can expect more than double that amount.
“This opens up more opportunities to increase their property portfolios and remortgage existing properties due to end on their current initial product rate.”
GMAC-RFC says it is confident that other lenders will have to follow to maintain their share of the buy-to-let market and to give landlords the choice of where they can place their business as their options are currently declining.
The product is a tracker with a pay rate of Bank of England Base rate minus 0.01% for three years, when it then reverts to Base rate plus 0.99% for the remainder of the term.
It is available for purchase or remortgage and has a maximum LTV of 85%.
It has a five-year early repayment charge of 5%, 4%, 3%, 2%, or 2%.
Rental assessment is calculated at 100% of pay rate, and there is an arrangement fee of £1,495.