Barclays Bank has done a U-turn and agreed to let landlords top-up buy to let mortgages that fail affordability tests from other income.
The bank carried out a pilot on the new approach last year.
The new affordability test means if a buy to let property fails rent cover tests, the borrower can offer other income to support the loan.
However, they have to provide evidence of:
* Net income after tax and national insurance deductions
* Any payments to dependants
* Details of any other residential mortgages
* Full disclosure of their buy to let holdings and income received
Some restrictions are in place – for instance the mortgage cannot go beyond the individual’s retirement age
Andy Gray, Barclays managing director of mortgages, said: “There are only a handful lenders that allow any shortfall in the rental income used to calculate affordability to be met by the applicant’s disposable income.
“Barclays new policy provides a greater opportunity for those planning for their financial future and choosing to invest in rental properties to help support their longer term goals of, for example, paying for their children’s university fees or enhancing their lifestyle in retirement.”
Santander has revamped the bank’s buy to let mortgage range with two-year fixed rates starting at 2.35% at 60% loan to value with a £1,995 booking fee.
Miguel Sard, Head of Santander Mortgages, said: “We know that different customers want different things, which is why our new range supports buy to let landlords, offers competitive rates, including larger loans and rewards customers’ loyalty.
“We have some of the lowest rates available in the market and want to support every customer secure the best mortgage to meet their needs.”
Keystone is offering buy to let mortgages to first-time investors.
Other lending conditions have been tweaked allowing houses in multiple occupation (HMO) with up to 10 bedrooms and new build flats.
David Whittaker, managing director of Keystone Buy to Let Mortgages, said: “First-time landlords must also own their own home or another property.
“Clearly, with the current housing shortage and more prudent lending environment, there is no reason why new-build flats shouldn’t be adequate security, particularly in strong city locations.”
Buy to Let Mortgage Update, February 2015 – http://t.co/i619IowUja
— LandlordZONE (@LandlordZONE) February 5, 2015