Vida Homeloans has altered its buy-to-let proposition, following the introduction of new underwriting standards by the Prudential Regulatory Authority (PRA) that came into effect earlier this year.
The lender’s rental cover is 125% for basic rate UK tax payers and limited companies (top up using surplus income from 115%) and 140% for higher rate UK tax payers (top up using surplus income from 120%). Other affordability criteria include:
- HMOs from 130% rental cover
- Rental calculation based on higher of product rate or 5.5% notional rate.
- 5% rate applies to pound for pound remortgages.
- 5 year fixed rate cover is based on product rate.
The announcement follows this week’s Housing White Paper which set out legislation to improve conditions in the private rental sector for both landlords and tenants. Vida already offers three-year assured shorthold tenancies (ASTs), available on student and corporate lets, with no limit imposed on the duration of corporate lets providing they are let directly to a registered provider of social housing or Public Limited Companies.
Louisa Sedgwick, director of sales for mortgages at Vida Homeloans, said: “Vida Homeloans prides itself on being a modern mortgage lender – committed to helping borrowers from a range of backgrounds with their specialist needs. Our buy-to-let proposition is designed to give flexibility to landlords and demonstratesour appetite to advance mortgages to landlords who want to offer longer tenancies.
“We have had great feedback from intermediaries and distribution partners about our willingness to consider 20% top ups from surplus income, which could mean that a higher rate taxpayer can obtain a buy to let mortgage based on 120% of rental income. Coupled with a notional rate of 5% on pound for pound remortgages, you can see how we are using ICRs which are tailored to the individual client’s financial status.”