Aldermore has launched a high level guide to help brokers and their clients navigate Prudential Regulatory Authority (PRA) changes in underwriting standards.
The specialist bank, along with the industry will adopt the new PRA underwriting standards in September 2017. The changes will mean more stringent affordability assessments across the market and lenders will need to apply a specialist underwriting approach.
As these changes are implemented, Aldermore wants to support to brokers and their portfolio landlord clients, who under the new regulation will be defined as those who have four or more mortgaged buy-to-let properties.
Aldermore will split portfolio landlords into two categories to determine what further information needs to be provided to underwrite the individual case:
| Portfolio Landlord –
Standard Assessment (up to 10 mortgaged Buy-to-Let properties with Aldermore) |
Portfolio Landlord –
Enhanced Assessment (11 or more mortgaged Buy-to-Let properties with Aldermore) |
Documents required:
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Documents required:
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Standardised templates will be available for each of the information requirements.
In addition for cases where the applicant has 11 or more mortgaged buy-to-let properties with Aldermore or total borrowing with Aldermore is £1 million or more, a face to face interview will be required.
Other checks will include portfolio affordability testing, rental income validation by postcode, and where personal income is used, assessment of living costs and essential expenditure.
Charles McDowell, commercial director of mortgages at Aldermore, said: “We recognise that there are big changes ahead and as a business, we have focused our attention to ensure that we and our brokers are best placed to meet these required changes. Having spoken to brokers, we recognise that lenders need to respond to the changes as there is currently not enough support available for brokers who need to adapt. This is why we have created the guides which we believe will help to provide the necessary information and support.
“We want to assure our broker partners that we remain committed to the buy-to-let market by doing everything we can to support portfolio landlords when these changes are implemented later in the year.”