The Leeds Building Society is the latest buy to let mortgage lender to amend its criteria for borrowers ahead of new guidelines put forward by the Bank of England.
From the New Year lenders must assess if borrowers can afford their mortgage products should there be an interest rate of 5.5 per cent, and borrowers must provide evidence that their rental income would cover 145 per cent of the mortgage outgoings – meaning that, in effect, landlords will be able to borrow less.
A final change is that lenders must also take into account a landlord’s overall tax position when agreeing whether to agree a mortgage – although it has not fulfilled the entire BoE demand yet.
From now on the society will insist on an income coverage ratio for buy to let and holiday let mortgages of 140 per cent and not 125 per cent.
“We believe the combination of an income coverage ratio of 140 per cent, 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” says Richard Fearon, chief commercial officer at the society.
