Leeds Building Society is introducing changes to its buy to let mortgages for landlords to fall in place with tougher lending conditions that come into play in January 2017.
The lender will be making changes to underwriting standards in light of the changes made by the Prudential Regulation Authority (PRA) with effect from the first day of the New Year.
It means that the income coverage ratio (ICR) for buy to let and holiday let mortgages will go up to 140%, from 125% and ICR assessment taking into account mortgage interest tax relief.
From 01 January the affordability stress test rate will be 5.5% for purchase and capital raising re-mortgages and affordability stress test rate where there is no additional borrowing will be 5%.
It pointed out that an ICR assessment is not required for existing Leeds Building Society buy to let customers who have come to the end of their existing deal and there is no additional borrowing.
Under the changes the lender will removed the minimum income requirement, previously £25,000 per annum or £40,000 for joint applicants and loans will be available up to 70% LTV.
‘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,’ said Richard Fearon, chief commercial officer of the Leeds Building Society.
‘Around 60% of buy to let advances are remortgages and our affordability stress test rate where there is no additional borrowing is 5%, which will support a significant number of landlords with existing properties looking to refinance their portfolio,’ he added.
