Buy-to-let mortgage lenders tighten stress test calculations
More buy-to-let mortgage lenders have tightened their stress test calculations and lowered loan sizes to comply with the Prudential Regulation Authority's end of year deadline.
The Mortgage Works, Coventry Building Society and Virgin Money have all announced their new calculations, although the majority of banks and building societies are already providing smaller buy-to-let mortgages.
Some landlords will be able to secure more generous mortgages if they have a sufficient surplus salary to boost the application or they lock into a longer term fixed rate.
Aaron Strutt, product director at Trinity Financial, says: "Buy-to-let mortgage lenders typically use the rental income generated from a property and apply an interest coverage ratio to work out the loan size.
"BM Solutions has totally changed the way it calculates maximum loans, and it now assesses the applicant's tax status. The stress rate will remain at 125% for basic rate taxpayers, although higher rate tax payers are subject to tougher rules and potentially lower loan sizes."
The Prudential Regulation Authority has introduced the new rules as part of the mortgage tax relief changes and plans to help boost the number of first-time buyers.
To secure a buy-to-let mortgage, call Trinity Financial on 020 7016 0790.
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