As you are aware, the PRA has issued new guidelines for all firms in relation to BTL underwriting criteria which came in to effect from 1st January 2017.
Darlington have reviewed their new guidelines and updated their BTL lending criteria which will come into effect for all new BTL applications received after the 1/1/2017;
- The Interest Cover Ratio (ICR) will be increased to 145% for Higher Rate Tax payers whilst Lower Rate Tax payers will remain at 130%.
- For Higher Rate Tax payers they will accept personal income to support BTL application where the ICR is less than 145% but greater than a minimum of 130%. A full affordability assessment must be undertaken in this instance to ensure surplus income is available to support the application.
- The interest rate used for stress testing purposes will increase from Pay Rate + 1% to Pay Rate + 2% OR a minimum of 5.5% whichever is the highest.
If you have any questions at all, please contact Darlington 01325 741004
