As you know, the Buy to Let market recently became the subject of further regulations when the PRA announced that lenders would have to make changes to how they assess affordability on BTL applications. One of the main focuses was on rental calculations – the Interest Coverage Ratio (ICR).
We’ve developed a clear and straightforward ICR policy. It’s easy to understand and recognises that one size doesn’t fit all:
* An ICR of 140% will be used if any applicant indicates on the application they are a higher or additional rate taxpayer. Gross annual income includes the total gross monthly rental income from the property to be mortgaged and all other investments.
In all cases we’ll apply a reference rate of 5.5%, or 5% if a fixed rate product of five years or longer is chosen.
We’ll also be validating applications to ensure that the correct ICR is being applied.
This simplified approach should help make it easier for you and your clients to make informed decisions on their Buy to Let needs.coventrybuildingsociety.co.uk/intermediaries/lending-policy/btl