We’ve made some changes to our BTL Interest Coverage Ratio (ICR) policy and our reference rate on 5+ Yr Fixed rate mortgages. We’re also now including Scottish tax bands to make it easier for Scottish tax payers to know which ICR band would apply to them.
It may mean some of your clients are able to borrow more and recognises that one size doesn’t fit all:
* Gross annual income includes the total gross monthly rental income from the property to be mortgaged and all other investments.
We’ll apply a reference rate of 5.5% (5% for porting or remortgaging with no additional borrowing) or 4.5% if a fixed rate product of five years or longer is chosen (see table below).
(inc. additional borrowing)
|Remortgage (no additional
|2 Yr BBR Tracker||5.5%||5.0%|
|Flexx for Term|
|2 Yr Fixed|
|3 Yr Fixed|
|5+ Yr Fixed||4.5%*|
For example, the table below shows how the 125% and 145% ICR would apply to a loan of £150k
|Reference rate||125% ICR||145% ICR|
We’ll continue to validate applications to make sure the correct ICR is being applied.