InterBay To Change Buy To Let Affordability Assessments

Dec 20 2016

From 21 December 2016, the way we assess affordability for Buy to Let (BTL) and HMO mortgages will change for all new AIP Requests.

Affordability

The minimum stress rate applicable for rental cover purposes will be 5.5%, or the initial pay rate plus 1.55%, whichever is higher.

Remortgages where no additional borrowing is being raised will not be subject to a minimum stress rate, with rental cover being assessed against the initial pay rate plus 1.05%.

5 year fixed rate applications will continue to be stress-tested at the initial pay rate, with no additional margin or minimum rate applicable.

Standard Buy to Let Definition Enhancements

We have extended our definition of Standard property to include HMO/multi/student lets with up to 5 rooms, or blocks of flats with up to 4 units, as well as single dwellings.

New interest coverage ratios

Standard Property

We have summarised our new interest coverage ratios below:

PRA Icons_E Shot_Interbay-01 PRA Icons_E Shot_Interbay-03
Single dwelling HMO/multi/student lets with up to 5 rooms Freehold block/titles of land up to 4 units
 

 

Limited company

Personal

Non-Portfolio borrower

(each individual owns fewer than 4 investment properties*)

Portfolio borrower

(at least one individual owns 4 or more investment properties*)

145%

Rental cover

165%

Rental cover

180%

Rental cover

*including the subject property

Specialist Property

PRA Icons_E Shot_Interbay-04 PRA Icons_E Shot_Interbay-05
HMO/multi/student lets with 6 or more rooms Freehold block/titles of land with 5 or more residential units
 

 

Limited company

Personal

Non-Portfolio borrower

(each individual owns fewer than 4 investment properties*)

Portfolio borrower

(at least one individual owns 4 or more investment properties*)

145%

Rental cover

165%

Rental cover

180%

Rental cover

*including the subject property

Remortgages

As detailed above, where no additional borrowing is being raised, the additional margin added to the pay rate will be 1.05%, rather than 1.55%, and no minimum stress rate will apply.

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