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Lowest mortgage rates for landlords are tied to good EPC ratings

Paragon Bank is the latest to reduce mortgage rates for landlords.

It’s cut rates across 22 buy-to-let mortgage products, with fixed deals now starting at 4.59 per cent.

The specialist lender says the reductions form part of a product refresh that has seen rates cut across a range of loan-to-value bands for both portfolio - those with four or more buy-to-let mortgaged properties - and non-portfolio landlords.


Highlights include a reduction on Paragon’s 70 per cent LTV two-year fixed rate product, now priced at 4.59 per cent.

This rate is available to portfolio landlords for the purchase or remortgage of single self-contained homes with EPC ratings of A-C. Rates increase to 4.64 per cent on properties banded EPC D or E and 4.84 per cent on HMOs and MUBs. 

The product fee on the two-year fixes is set at 5.0 per cent and interest coverage ratios (are calculated at two percentage points above initial rates. 

Louisa Sedgwick, Commercial Director at Paragon Bank, says: “In this market, landlords want options, so we are pleased to offer these competitive rates with a mix of terms, LTVs and fees.

“With a range of different indicators suggesting that the UK economic outlook is strengthening, the stabilisation of swap rates has continued and, as a result, we’ve been able to again reduce rates on some of our key products.”

In the mainstream mortgage market dominated by High Street bank lenders, more cuts are expected on top of those already announced.

Lloyds Banking Group, Barclays, Nationwide and Santander have either cut borrowing rates or indicated they will within days.

Nicholas Mendes, a mortgage manager at the broker John Charcol, says HSBC had “laid down the gauntlet and shown they mean business” with their latest announcement.

“This is their second rate reduction in a week, along with criteria changes which extend terms to 40 years” he adds.

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    It would be nice if they offered better rates for existing customers with good EPCs. Where's the incentive to stick with a lender if at product switch time you get the same rate as someone with a low EPC? Where's the incentive to improve the EPC of a house you already own? These lower rates are just a virtue signalling sound bite. If Paragon really wanted to show commitment to eco improvements all customers with a good EPC would be put on a lower rate.

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    Until the EPC is updated & measures what it is supposed to this is a farce! Simply put, houses with new gas boilers & loft insulation will qualify for better rates than an electrically heated property. Those with higher heating costs will also have higher mortgage costs!

  • icon

    Another misleading story … product fee at 5%! Scandalous!


    Agree, these companies shouldn't be allowed to get away with it

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    What a pointless article and a waste of our time reading. 5% arrangement fee is really an extra 2.5% pa.
    Surely this journalist and website aren’t that dim.


    Completely agree I thought the exact same thing. These people clearly can’t add up!! It’s so frustrating when you have commentary like this because the next thing we’ll hear is this “low rate” being used against us by campaigners!

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    Don’t care 🤔 half of mine are mortgage free, the other 2 are due to be paid in about 18 months 🎉 Then all sold just before the big C 😱😱🆘🆘


    Since some people have commented on the CGT liability I thought I'd check what the figures are now. Very surprised to see the annual exempt amount for 2023/24 has been cut to £6,000, previous 3 years it's been £12,300. After deducting this allowance you pay 18% on any gains if lower rate tax payer and 28% if a higher rate tax payer. You can deduct all buying and selling costs before calculating the tax liability.

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    You sound quite smug @Simon Logan,but you'll be stung with CGT if you sell them all at once.


    Wendy Copsey... Why does Simon sound smug? I'm sure he's aware of CGT and hopefully will still make a good profit for his years of hard work. I'm in the same position... Mortgage free!! Yay!! Don't be that green eyed monster Wendy... 🤮. Congratulate Simon on his achievement.. 👍


    It was my understanding that there wouldn't be much CGT consequence of selling everything at once with the capital gains tax allowance having become so small.

    However, would it make a difference if you sold in the tax year in which you had stopped letting everything so that your income was very much reduced for that year?

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    Mine are all mortgage free and I'll be selling the lot. It's a nightmare here in Scotland actually getting tenants out though with the eviction ban . I've been trying for ages with one in particular and the court keeps blocking me on 'technicalities'.... 3 times my application to evict has been turned down. The shape of things to come I'm afraid. It's only going to get worse... What's it coming to when you're not allowed to sell your own property for retirement? Shame on you Scottish government 🏴󠁧󠁢󠁳󠁣󠁴󠁿


    Sounds an extremely unfair situation Shane.

  • Franklin I

    It seems that when they extracted all the data from the Landlords Licensing applications, that was sold on, via the council's, they said look at all these EPC results.
    The LL's have an average rating of D/E.
    We can make some money here, just as the government will do so in 2025, when LL's will get fines of up to £30K if their EPC rating isn't a C rating or above!

    When the PRS is gone, it'll be gone for ever.

  • George Dawes

    EPC is an Extremely Pointless Certificate

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    I agree with George, EPC is totally meaningless. Have a double glazing, new boiler, low LED bulbs lighting, 400cm loft insulation, EPC may give you low "C" or high "D". However, for tenants it is warm, as they have heating on, but some tenants do not bother heating the house and complain that the EPC is incorrect, as heating in December should not be necessary. If dampness and moulds develops due wet clothes and wet boots with mould they blame the EPC. The external wall was injected with insulation too, to bring "C". Tenants are not responsible people, so no amount of work will be sufficient.

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    The way this article is written is as if Paragon is doing something worthwhile for BTL market. It seems Paragon wish to make money upfront of 5%, as if the remaining loan is interest free for 2 years, plus 4% plus rate interest. They make 5% upfront, the rest is chicken feed for them.


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