For all the London landlords out there, BTL mortgages are about to get significantly tougher.
The vast majority of BTL lenders use the following stress test when calculating how much to lend - loan size x 5% /12 x 125%. Thereore, to borrow say £500,000, the rent would need to be £2604pcm which is very punchy.
Barclays along with a couple of other lenders use what is known as the pay rate which is the fixed rate on offer so instead of using 5%, will use say 3.59% allowing the client to borrow a lot more. This is especially prevelant to London where rent to mortgages payments are fairly tight.
From Monday, Barclays are increasing the calculation to 5.79% which is essentially going to have a huge impact on the London BTL market as landlords are going to have to potentially put in a lot more capital upfront to make the calculation work.
Woolwich ramps up B2L affordability test | News | Mortgage Strategy
The vast majority of BTL lenders use the following stress test when calculating how much to lend - loan size x 5% /12 x 125%. Thereore, to borrow say £500,000, the rent would need to be £2604pcm which is very punchy.
Barclays along with a couple of other lenders use what is known as the pay rate which is the fixed rate on offer so instead of using 5%, will use say 3.59% allowing the client to borrow a lot more. This is especially prevelant to London where rent to mortgages payments are fairly tight.
From Monday, Barclays are increasing the calculation to 5.79% which is essentially going to have a huge impact on the London BTL market as landlords are going to have to potentially put in a lot more capital upfront to make the calculation work.
Woolwich ramps up B2L affordability test | News | Mortgage Strategy
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