The Leeds Building Society has announced new criteria following the PRA’s changes to underwriting standards for buy-to-let mortgages.
The changes, which will come into effect on 1 January 2017, are as follows:
- Income coverage ratio (ICR) for buy-to-let and Holiday Let mortgages will go up to 140%, from 125%.
- ICR assessed taking into account mortgage interest tax relief.
- Affordability stress test rate is 5.50% for purchase and capital raising re-mortgages.
- Affordability stress test rate where there is no additional borrowing is 5.00%.
- An ICR assessment is not required for existing Leeds Building Society buy-to-let customers who have come to the end of their existing deal and there is no additional borrowing.
- Removed the minimum income requirement (previously £25k pa or £40k for joint applicants).
- Available up to 70% LTV
Richard Fearon, the Leeds’ chief commercial officer, said: “We believe the combination of an income coverage ratio of 140%, a specific and lower stress test rate for re-mortgages, our supporting criteria and market expertise brings a unique proposition to the buy-to-let market.
“Around 60% of buy-to-let advances are re-mortgages and our affordability stress test rate where there is no additional borrowing is 5.00%, which will support a significant number of landlords with existing properties looking to refinance their portfolio.”