Thursday, January 19th, 2017
Even though the Prudential Regulation Authority (PRA) guidance regarding the assessment of buy to let mortgages is now well and truly embedded in most lenders’ application process, there still appears to be confusion as to the implications of these changes not only amongst those seeking to raise a mortgage against a buy to let property for the first time but also amongst some professional landlords too.
The main reason stems from the changes to how lenders now perform the “rental test” as part of their affordability calculation for any buy to let mortgage being requested. There are different interpretations of the guidance being used across the mortgage market but essentially the main impact on borrowers is that in most instances the mortgage payments will be stress tested by up to 145% compared to the 125% test previously applied.
This increased percentage has resulted in a reduction in the number of buy to let mortgages being sanctioned and/or a lower level of borrowing being made available on a case by case basis.
In addition to this, some lenders also have their own individual criteria around levels of personal income, whether the property is a flat or a house, the borrowers personal tax banding as well as the size of the existing landlords’ portfolio and/or their overall exposure. Consequently, with the PRA changes, finding the best and most appropriate buy to let mortgage lender in all the circumstances has become much more difficult unless you use a specialist broker.
It is for these reasons that many experienced landlords still prefer to use a buy to let mortgage broker who will be able to recommend the most appropriate lender that best meets their requirements. Many of these mortgage brokers also have access to lenders and/or exclusive products that are just not available direct to the public, increasing the value of the service they offer to their prospective and existing clients.
Check out what our clients say about us by clicking HERE, or alternatively just call Caboodle Finance of Sutton Coldfield, Birmingham today on 0121 308 9114 and we will be delighted to help you in whatever way we can with your buy to let mortgage queries.
Caboodle Financial Services Ltd
240B Lichfield Road
Sutton Coldfield B74 2UD
Telephone: 0121 308 9114