Lender tightens mortgage criteria

I've reported before about the Bank of England intention restrict buy-to-let lending to make obtaining a mortgage more difficult and more costly for landlords.

On Friday one of the biggest lenders The Mortgage Works (TMW) increase its rental cover for it's mortgages from 125% to 145%.  The rental cover refers to the percentage of the projected rent in relation to the mortgage payments.

The lender which is part of the Nationwide BS has blamed the move on the Chancellor recent move to place limits on the amount of mortgage interest that a landlord can offset against their rental income.  The results for many higher rate taxpaying landlords is that their tax liability will increase considerably. An increasing number of landlords are incorporating their rental business in an attempt to side step the changes.

TMW has also announced that from 11th May it will reduce the maximum size of a buy-to-let loan from 80 to 75%.

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