Mortgage on offer to help investors

Bank of Scotland Ireland is introducing a new buy-to-let mortgage from mid-May, offering competitive interest rates between 3.15 per cent and 3.45 per cent.

The new investor mortgage, which will track the European Central Bank (ECB) base rate, is available as a normal capital-plus-interest repayment mortgage and as an open-ended interest-only mortgage. Borrowers can also opt for a combination of the two types of loan.

The bank's lowest investor rate of 3.15 per cent is offered to people borrowing more than €250,000 where the borrowings do not exceed 60 per cent of the purchase price.

The maximum loan-to-value (LTV) is 75 per cent of the purchase price or property valuation, a lower maximum LTV than that available at some of the bank's competitors.

The bank is targeting experienced residential property investors, imposing a condition that only investors with two existing residential investment properties can apply.

A spokesman for Bank of Scotland said investors could choose to switch to the loan when they are adding another property to their portfolio or they could move their existing loans purely to get a better rate.

Lending institutions are stepping up their efforts to win the valuable business of more seasoned property investors, perhaps amid fears that the market for first-time investors is running out of steam.

Experienced investors frequently have total borrowings on residential properties in excess of €1 million and plenty of equity to borrow more if they want to add to their portfolios.

Brendan O'Hora of First Active said investors with large portfolios were increasingly shopping around to get loan packages at lower interest rates. These investors wouldn't be given an off-the-shelf mortgage product, he said.