Coventry for intermediaries has made it simpler for landlords to borrow more by reducing the reference rates for buy-to-let applications.
Using the new calculations, a basic rate taxpayer receiving a rental income of £900 and opting for a five-year fixed rate, could borrow £181,895 (previously £157,091) subject to the 75% loan to value (LTV) limit.
The reference rates are now as follows:
- 4.75% (previously 5.5%.) for five-year fixed rates, for purchase and remortgage applications – OR product pay rate (whichever is higher)
- 5% (previously 5.5%) for two-year fixed rates, for remortgages with no additional borrowing – OR product pay rate (whichever is higher)
- 6.5% (previously 7%) for two-year fixed rates, for purchases and remortgages with additional borrowing – OR product pay rate +2% (whichever is higher)
The minimum rental income required is 125% or 145% of the mortgage payments, based on the above applicable reference rate.
Brokers can find out the maximum loan amount, or the maximum rental income required, using the affordability calculators on the intermediary website.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “Landlords help provide homes for those who are waiting to buy or simply not in a position to buy. Our affordability changes should help make it easier for new and existing landlords to finance their rental properties and help keep up with tenant demand.
“We try to make it as easy as possible easy for brokers to help their landlord clients, which is why we don’t ask for a minimum income – we simply look at rental income. Our buy-to-let calculator helps brokers easily see how much their landlord clients can borrow, and these new changes to our reference rate will likely mean many of those clients can borrow more if they need to.”