Our Buy to Let interest coverage ratio (ICR) applicable to both Standard and Specialist property types is being simplified, with some also being reduced.
In addition, ICR calculations will no longer depend on the number of properties a customer owns. Instead, ICR will simply depend on whether the application is in a personal or limited company name, and whether the property is Standard or Specialist.
We’ve summarised our new interest coverage ratios below:
Standard Property
- Single dwellings
- HMO/ multi/ student lets with up to 5 rooms
- Freehold block/ titles of land with up to 4 units
| Limited Company | Personal |
|---|---|
| 125% rental cover | 140% rental cover |
Specialist Property
- HMO/ multi/ student lets with 6 or more rooms
- Freehold block/ titles of land with 5 or more residential units
| Limited Company | Personal |
|---|---|
| 145% rental cover | 160% rental cover |
Affordability
Affordability stress rates remain unchanged:
- Minimum stress rate applicable for rental cover purposes is 5.5%, or the initial pay rate plus 1.55%, whichever is higher.
- Remortgages where no additional borrowing is being raised are not subject to a minimum stress rate, with rental cover assessed against the initial pay rate plus 1.05%.
- 5 year fixed rate applications are stress-tested at the initial pay rate, with no additional margin or minimum rate applicable.
For more information on the changes to our ICR requirements, please visit our websiteor contact your Business Development Manager.
