Nationwide and The Mortgage Works act to lower buy-to-let loan sizes
The buy-to-let lending arm of the Nationwide Building Society has announced plans to increase its rental calculation in anticipation of the Prudential Regulation Authority’s (PRA) new lending caps.
Nationwide’s subsidiary The Mortgage Works will be raising its buy-to-let rental calculation from 125% to 145%. It is also lowering its maximum loan-to-value from 80% LTV to 75% LTV.
Aaron Strutt, product manager at Trinity Financial, says: “Buy-to-let lenders are starting to introduce the PRA’s tougher affordability rules to reflect the tax changes as it looks to ensure lending is more controlled. From Wednesday 11 May 2016, The Mortgage Works will change its affordability calculations and lower the maximum loan-to-values.
“If a property generates £1,250 rent each month, then maximum loan sizes will be lowered quite considerably. At the moment, when landlords opt for a two-year fix or tracker rate and the mortgage is below 65% loan-to-value, they can borrow £240,480. This may fall to £207,311.”
For mortgages up to 75% loan-to-value, the same £1,250 rent when choosing a two-year or five-year fix the mortgage may be reduced from £218,579 to £188,430.
Many buy-to-let lenders have not tightened their acceptance criteria significantly, although they are likely to make changes over the coming months.
To secure a buy-to-let mortgage or switch to a better rate call Trinity on 020 7016 0790
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