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Virgin Money widens Rate Reducer distribution; TMW improves affordability – round-up

  • 05/03/2024
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Virgin Money widens Rate Reducer distribution; TMW improves affordability – round-up
Virgin Money has extended its Rate Reducer product in partnership with Own New to more eligible mortgage brokers.

The range at Virgin Money offers reduced mortgage rates to borrowers purchasing a new-build home, and is open to both first-time buyers and homemovers. 

It is available through more than 60 housebuilders, including Barratt Homes, Persimmon, Taylor Wimpey, Bellway and Berkeley Homes. 

Rates as low as less than one per cent are available through the offering. 

It works by investing housebuilder incentive budgets back into the mortgage upfront to lower initial repayments. These usually account for five per cent of the property purchase price. 

Craig Calder (pictured), head of secured lending at Virgin Money – which recently upped select rates – said: “Virgin Money is delighted to be a founding lender of the innovative Own New Rate Reducer, making it easier and more accessible for customers to afford a new-build home.

“Buying a home is a major life event, and this first-of-its-kind mortgage product will help customers feel happier about their big purchase, knowing that with the homebuilders’ incentive included, they have the certainty of a much lower fixed interest rate over the initial period of the mortgage.” 


The Mortgage Works amends affordability criteria 

The Mortgage Works (TMW) has reduced its interest coverage ratio (ICR) calculations to improve affordability for borrowers. 

For higher-rate taxpayers, the ICR will fall from 165 per cent to 160 per cent. For limited company borrowers and lower-rate taxpayers, this will be reduced from 130 per cent to 125 per cent. 

The lender is also lowering the existing portfolio rental calculation stress rate from five per cent to 4.5 per cent. 

Joe Avarne, senior manager of buy-to-let (BTL) mortgages at TMW, said: “We regularly review our affordability policy to ensure borrowing is sustainable for our landlords.

“With these latest changes, we’re pleased to be able to reduce our ICRs so that landlords can borrow more and achieve their BTL aspirations.” 

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