Redwood enhances mortgage flexibility with extended terms and lower coverage ratios

Redwood Bank has announced significant enhancements to its owner-occupier and commercial 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.

For commercial investment, the limited company ICR is now 130% (previously 135%) and personal is down from 150% to 145%.

For commercial owner occupier, limited company coverage ratios are down to 130% and personal reduced to 145%.

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

The updates apply across Redwood’s residential buy-to-let 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 across the ranges. 

Tom Worbey, senior product manager at Redwood Bank, 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.”