New mortgage rules for buy to let borrowers

The Final Spring Budget
March 10, 2017
Bringing your financial dreams to life
April 19, 2017

New mortgage rules for buy to let borrowers

Our adviser Patrick Goddard explores the new rules introduced by the Prudential Regulation Authority (PRA) in January 2017 which will potentially make obtaining buy to let mortgage finance more difficult.

Buy to let mortgage customers face tougher criteria as lenders adapt to these new regulations.

With additional new rules on lending coming into effect investors may not be able to borrow as much against the total value of a property.

The changes have come about at a time when mortgage interest rates are low hence the affordability assessment factors in future interest rate rises.

How will this effect the borrowers?


Lenders will now be required to use an ‘Income Coverage Ratio’ test (ICR) which looks at the total personal income including any rental income and whether it will meet the mortgage repayments.
If personal income is not to be taken into consideration, then the incoming rent will be required to cover 125% of the outgoings based on a minimum of 5.5% interest rate.
Equity in the property will not be considered in the affordability assessment.
However if a landlord has money in savings this can be used as a measure of income.

What else will change?

Lenders can now allow for a rise in rental income of up to 2% a year when deciding whether a landlord will be able to afford a property.

Terms of less than 5 years or fixed rates of 5 years or more will not be subject to the affordability stress test.

By 30th September 2017 the PRA expect lenders to employ specialist underwriting in respect of ‘Portfolio Landlords’. These measures go beyond the standard requirements in recognition of the more complex nature of this lending.
‘Portfolio Landlords’ are considered to be anyone with more than 4 buy to let properties.


Remortgages which are of the same value will not be affected by the changes and with remortgaging lenders can exclude the arrangement fees, professional fees and administration costs when determining the amount of borrowing.

In Summary

What this all means is that anybody who already owns buy to let property with finance or is thinking about purchasing a buy to let should seek advice with regard to mortgage funding.
In particular those individuals with more than 4 properties should consider their current and future needs and it may be sensible to take advice well before the September deadline.

If you have any questions about getting a buy to let mortgage or if your is coming to the end of its term call the office on 01752 837950.


  1. Anonymous says:

    Appreciate you sharing, great blog post. Fantastic.

  2. I just could not leave your website prior to suggesting that
    I extremely loved the standard info an individual supply in your guests?
    Is going to be back incessantly in order to check out
    new posts

  3. پنجره says:

    It was great to read this article and I believe you are really right. Inform me if you are thinking about made to measure upvc windows, this is my principal expertise. I really hope to check back with you soon, bye for now!

  4. Dennise says:

    I have read several good stuff here. Definitely worth bookmarking for revisiting. I wonder how so much attempt you put to create any such great informative website.

  5. Darryl says:

    Fantastic web site. Plenty of useful information here. I am sending it to a few pals ans also sharing in delicious. And naturally, thanks on your effort!

  6. karaj says:

    What i don’t realize is actually how you are not actually much more well-liked than you might be right now. You’re so intelligent. You realize thus significantly relating to this subject, made me personally consider it from numerous varied angles. Its like men and women aren’t fascinated unless it’s one thing to do with Lady gaga! Your own stuffs nice. Always maintain it up!

  7. karaj says:

    I’m truly enjoying the design and layout of your website. It’s a very easy on the eyes which makes it much more enjoyable for me to come here and visit more often. Did you hire out a developer to create your theme? Great work!

  8. Thanks a lot for discussing this info, I bookmarked the website. I’m also trying to find info on Arvind Pandit, are you aware the place where I might come across something such as this? I will be back in a little while!

  9. There is great developments on the design of the blog, I really like it! My own is relating to opera mini download and currently there are a lot of things to do, I am still a newcomer in web design. Thanks!

  10. Hello there. I recently found this amazing site and I truly enjoy it. I like to chat about phone number tracker with location from time to time. Good to be here, thanks a lot!

  11. Kik Online says:

    You are absolutely correct. I really enjoyed looking through this article and I will certainly get back for more soon. My own website is dealing with kik on computer, you can take a look if you are interested in this.

  12. Hello there, you’re definitely correct. I frequently read through your site content attentively. I’m likewise focused on wireless intercom for home, perhaps you might talk about this sometimes. Bye!

Leave a Reply

Your email address will not be published.