Leeds Building has announced new criteria for its buy-to-let mortgages following the Prudential Regulation Authority’s changes to underwriting standards.
The changes, which come into effect on 1 January 2017, are designed to support the buy-to-let market.
The income coverage ratio for buy-to-let and holiday let mortgages will go up from 125% to 140%.
Leeds said the affordability stress test rate is 5.50% for purchase and capital raising remortgages and 5% where there is no additional borrowing.
An ICR assessment is not required for existing Leeds buy-to-let customers who have come to the end of their existing deal and there is no additional borrowing. The ICR assessment will also take into account mortgage interest tax relief.
The minimum income requirement was also removed, which was previously £2,000 per annum or £40,000 for joint applicants.
The range will be available up to 70% LTV.
Richard Fearon, 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 BTL 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.”
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