Coventry for intermediaries has revamped its affordability criteria for buy-to-let mortgage applications, promising easier access to funding. This change means landlords can now borrow more against their rental properties than ever before, thanks to a generous reduction in the reference rates.
Previously, a basic rate taxpayer earning £900 in rental income and eyeing a five-year fixed rate deal could secure up to £157,091. Now, with the enhanced affordability, the same landlord can borrow as much as £181,895, all within a 75% loan-to-value (LTV) limit. This significant jump in borrowing capacity is attributed to the reduced reference rate for five-year fixed rate purchases and remortgage applications, which has been lowered from 5.5% to 4.75%—or the product pay rate, whichever is higher.
More Good News for Two-Year Fixes
The generosity doesn’t stop there. For those looking at two-year fixed rate remortgages without any additional borrowing, the rate has seen a reduction from 5.5% to 5%, or again, the product pay rate. Meanwhile, for two-year fixed rate purchases and remortgages that involve additional borrowing, landlords are now looking at a reference rate of 6% or the product pay rate plus 2%.
Understanding the Rental Income Requirements
Under the new regime, the minimum rental income required stands at either 125% or 145% of the mortgage payments, depending on the reference rate applicable. This adjustment is part of Coventry for intermediaries’ commitment to supporting landlords in managing and expanding their rental portfolios efficiently.
A Helping Hand from Coventry
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, highlighted the vital role landlords play in providing homes for those not yet ready or able to buy. He said, “Landlords help provide homes for those who are waiting to buy or simply not in a position to buy. Our affordability changes should help make it easier for new and existing landlords to finance their rental properties and help keep up with tenant demand. We try to make it as easy as possible easy for brokers to help their landlord clients, which is why we don’t ask for a minimum income – we simply look at rental income. Our buy-to-let calculator helps brokers easily see how much their landlord clients can borrow, and these new changes to our reference rate will likely mean many of those clients can borrow more if they need to.”