The Coventry for intermediaries has made important changes to their Buy to Let lending criteria

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 Cover Ratio (ICR).
The Coventry for intermediaries has developed a clear and straightforward ICR policy. It’s easy to understand and recognises that one size doesn’t fit all:

  • If the total gross income of all applicants is less than £40k, the ICR is 125%
  • If the total gross income of any applicant is £40k or more, the ICR is 140%. 

* An ICR of 140% will be used if any applicant indicates on the application they are a higher or additional rate taxpayer.
In all cases they’ll apply a reference rate of 5.5%, or 5% if a fixed rate product of five years or longer is chosen.
At the same time, they’re making the following changes for Buy to Let mortgages: 

  • removal of minimum income
  • removal of minimum time in employment.

They’ll be validating applications to ensure that the correct ICR is being applied.
Kevin Purvey, Director of Intermediaries said: “As the BTL market becomes more complex, we’ve strived to keep our offering as simple and straightforward as possible. By listening and working with intermediaries we will now operate a two tier ICR calculation as part of our overall assessment. These clear and transparent changes will allow us to offer our BTL products and award -winning service proposition to a wider group of customers.”

To find out more, go to the Coventry for intermediaries website.