Specialist bank enhances mortgage flexibility with extended terms and lower coverage ratios

With landlords and brokers facing increasing pressures, Redwood Bank is continuing its campaign to provide greater flexibility by making significant enhancements to its commercial investment and owner-occupier mortgage offerings.

The specialist bank has extended its maximum mortgage term from 25 to 30 years and reduced the minimum applicable debt service coverage ratios across key lending categories:

• Commercial investment:

  • Limited company: now 130 per cent (previously 135 per cent)

  • Personal: now 145 per cent (previously 150 per cent)

• Commercial owner-occupier:

  • Limited company: now 130 per cent (previously 135 per cent)

  • Personal: now 145 per cent (previously 150 per cent)

Redwood has also reduced its commercial mortgage interest rates with variables rates now starting from 4.04 per cent plus base rate and fixed rates from 7.09 per cent.

These changes build on improvements introduced earlier this year to strengthen borrowing power for SMEs and landlords navigating a more challenging market.

Landlords have faced increasing pressure in recent years due to rising interest rates, which have constrained borrowing capacity and made it harder to complete deals. Redwood’s latest changes are designed to improve affordability, ease repayment pressure and help more cases successfully complete.

Tom Worbey, senior product manager, said: “Affordability is front of mind in today’s market. Landlords are dealing with higher costs and tighter yields and businesses face reduced business rates relief and increased NI. All of these add extra burdens to these businesses, and brokers are working harder than ever to structure viable deals.

“By extending our mortgage term and reducing the minimum coverage ratios, we’re giving brokers and their clients greater flexibility to find the commercial borrowing they need.”

The updates apply across Redwood’s residential BTL and commercial mortgage product ranges. Affordability calculations now reflect the reduced stress rates, following earlier rate reductions implemented by the bank.

Redwood has also introduced a new tiered pricing structure as part of its ongoing commitment to enhance its lending proposition.

To find out the full changes, visit Redwood Bank for Intermediaries