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Tuesday, February 07, 2017

PRA regulations BTL mortgage update

It has been a couple of months since we saw the initial reactions of lenders to the PRA regulations relating to interest coverage ratios (ICRs). Almost all of the providers on Property Hawk Mortgages’ buy-to-let sourcing system have altered their affordability assessments, with most lenders using a variety of rental calculations for different circumstances resulting in a bewildering array of products.

However, the changes to ICRs and stress rates do not provide the full picture as there are some lenders running additional affordability assessments alongside their rental calculations or offering alternative income top-up options. There are also different affordability calculations for basic rate and higher rate tax payers, which may not always be obvious to landlords searching for a buy-to-let mortgage.

As a buy-to-let specialist, Property Hawk Mortgages is dedicated to providing the highest level of support to landlords, but it has taken a considerable amount of time and work to get to grips with all the changes that have occurred and to ensure staff are up to speed. We know that landlords looking for buy-to-let mortgages are also finding the market challenging and there are further changes ahead when the new underwriting requirements for professional landlords come into effect later in the year.

The market is set to become more complex in September as the PRA will require additional underwriting standards for portfolios of 4 or more properties, which may result in the polarisation of lenders in the marketplace. Some lenders may choose to keep their existing online processing systems in place, opting to deal only with landlords with up to 3 properties and leave the professional landlord business to more specialist lenders.

Jane Simpson at Property Hawk Mortgages
Tel: 029 2069 5446
Your home may be repossessed if you do not keep up repayments on your mortgages.  

The Financial Services Authority does not regulate some forms of mortgage.

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