Mortgages Buy to Let Portfolio Changes

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1 Mortgages Buy to Let Portfolio Changes A summary of the upcoming buy to let portfolio changes. Last Updated: 08/09/2017 Will you offer mortgages to What are your underwriting requirements for Accord Mortgages Accord will remain open business for landlords with 4 or more properties from 30 September when the FCA changes come in. There will be few changes for advisers already doing business with Accord Buy to Let. Here are a few points to clarify our position: A portfolio landlord is deemed as such if at completion of the loan they will hold 4 or more BTL properties. This includes applications in progress with other lenders at the time of application, plus any limited company BTL mortgages they may hold. Our background rental calculation will change from the collective rent received on all background properties meeting 125% of pay rate to 135% of 5% All will be asked to complete an assets statement detailing all savings. Additional questions will be asked relating to future financial changes which could impact the affordability of their BTL portfolio. Portfolio Landlord - Standard Assessment (Up to 10 mortgaged Buy to Let properties with Aldermore) Portfolio Landlord - Enhanced Assessment (11 or more mortgaged Buy to Let properties with Aldermore) Documents required: Documents required: Aldermore Mortgages Portfolio schedule Business Plan Portfolio schedule Business Plan 12 month Cashflow Forecast Statement Statement of Assets and Liabilities Aldermore will provide templates for these documents to make it easier to submit portfolio landlord applications (other versions providing the same level of information will be accepted).

2 What are your underwriting requirements for We already assess BTL affordability by undertaking a personal solvency review and detailed affordability assessment of the borrower. Barclays From 19 September 2017, your clients will be allowed a maximum of 6 mortgaged BTL / permission-to-let (PTL) properties with us, and a maximum of 10 mortgaged BTL / PTL properties across all lenders (including us). Our other BTL criteria remain the same: Term: 5-25 years Maximum LTV: 75% (60% for individual loans of more than 1m) Maximum individual loan: 2m Maximum aggregate borrowing with us: 3m ( 4.5m across all lenders) Minimum personal income: 25,000 ( 75,000 for individual loans of more than 1m) Rate-switch-only applications aren t affected by these changes. Making an application with us From 19 September 2017 onwards: We ll apply a specialist underwriting approach for new BTL portfolio landlord applications (applications started before this date aren t affected) All portfolio landlord clients will need to complete a property schedule We won t need a separate property schedule if a client has fewer than 4 mortgaged rental properties (including the subject property) across all lenders

3 What are your underwriting requirements for There are no changes to our current application process for your cutomers with less than 4 Buy to Let properties. BM Solutions We will apply a specialist underwriting approach for Portfolio Landlords that recognises the complexities in managing a portfolio of Buy to Let properties. We will apply the following criteria for Portfolio Landlord applications: No more than 10 mortgaged Buy to Let properties including the new application to BM Solutions Minimum of 30,000 earned taxable income - per application (this does not apply to non- portfolio clients) A maximum aggregate portfolio Loan to Value of 75%* A minimum aggregate 145% rental income cover stressed at 5.5%*. * Based on the entire portfolio including the acquiring property and any unencumbered let property For applicants with less than four Buy to Let mortgaged properties, the normal Buy to Let criteria and process remains unchanged. For applications with 4 or more mortgaged Buy to Let properties further information will be requested at the time of full application. This will include a fully completed Client Profile Form, proof of income and deposit. It is important that this information is completed accurately and promptly to allow for timely processing of your client s application. Additional information These changes apply to all relevant applications commencing on or after Monday 11 September. Buckinghamshire Building Society

4 What are your underwriting requirements for Coventry for Intermediaries All properties will be assessed in every portfolio landlord case. This means that you must provide information that includes the value of each mortgage, monthly mortgage repayments, monthly rental amounts and estimated property values. You ll also have to provide full details of any unencumbered BTL properties in the portfolio. This will be validated and assessed by a dedicated team of portfolio underwriters. Max LTV of 65% across the whole portfolio. The calculation will include properties that are unencumbered and the property your customer is applying for. unencumbered and the property your customer is applying for No single property should be below an ICR of 100%. Portfolio landlords must have acquired their first BTL property more than 24 months before the current application. No more than three properties (prior to the current application) should have been acquired within the last 12 months. The minimum ICR across the whole portfolio, including properties mortgaged with other lenders, should be 125% (based on a reference rate of 5.5%). The calculation will include properties that are Darlington

5 What are your underwriting requirements for Where an application is received for a BTL portfolio landlord, we'll only consider lending on one or two of the properties. Any additional properties would need to be presented to another lender. All borrowers who have four or more mortgaged BTL properties will be considered a portfolio landlord and in such cases, we'll need information regarding: The applicant s experience in this sector Their existing portfolio and outstanding mortgages (for example how long they ve held their portfolio, how many properties they have and what equity they retain) Their total assets and liabilities The merits of any new lending in the context of their existing portfolio, together with their business plan A detailed analysis of their cash flows associated with all their properties. Family Building Society To support any such application, we ll need the following details: The property address The rental amount Mortgage size Mortgage instalments and property value Their business plan in relation to the portfolio. To help make this as straightforward as possible, we ve created two new forms (a Business Plan Checklist and Applicant's Assets and Liabilities form) to use when you submit this type of business to us. With manual underwriting already in place, we're well placed to support the PRA's decision that a specialist underwriting approach is needed. We remain committed to supporting those who are 'small time'/accidental landlords with a maximum of two BTL properties. Fleet Mortgages Post 30th September Fleet will continue to operate a business as usual approach to underwriting portfolio landlords.

6 What are your underwriting requirements for Furness Building Society Undecided Hinckley & Rugby Will require with four or more mortgaged properties to provide a business plan, assets and liabilities statement and a cash flow statement in support of any mortgage application. Kent Reliance Under the new criteria, borrowers will also need to provide details of their wider BTL portfolio for assessment as part of the underwriting process. Portfolio landlords will be subject to an interest rate stress test of 5 per cent on the rest of their portfolio and must meet or exceed an interest cover ratio of 125 per cent. Keystone Has NO Limits to the amount of properties owned by the client Keystone has a maximum lending facility of 2,000,000 this can be over any number of properties although above 1m we would look for the average loan to be around 400,000 per property Whether the client is borrowing Personally, SPV or Trading Limited company keystone would require the following information: Keystone Up to date property portfolio spreadsheet. o Keystone will provide an online tool to convert the client s spreadsheet into the required format for underwriting. The whole portfolio will be stressed at to confirm the gearing works and the new application can be accepted. Each property within the portfolio will have demonstrate their current mortgage payments are covered by 100% of rental income where the portfolio is in excess of 80% gearing, the case will not be considered An AVM will be used to verify the valuation and rental figures provided. Prove the clients are paying tax on the portfolio by way of SA100 full tax returns and SA302 s

7 Prove of last two years mortgage payments if no shown on the credit report. Leeds Building Society Mansfield Building Society Marsden Building Society Will you offer mortgages to As we move forward other items may be requested What are your underwriting requirements for The society will increase its maximum portfolio size to 10 mortgaged rental properties and increase the maximum number of Holiday Lets accepted. This will provide you with greater flexibility to mix and match, enabling you to use Leeds Building Society for up to four rental properties, whether Buy to Let, Holiday Let or a mixture of the two. The Society s underwriting processes will continue to be proportionate to case complexity. In addition to the property schedule already requested, will need to detail their assets and liabilities as well as future portfolio intentions. Only in more complex cases will the Society request additional information such as cashflow The Mansfield Building Society has announced it is well placed to meet the Prudential Regulatory Authority s deadline of the 30 September for underwriting Buy to Let Portfolio Landlords whilst also implementing further changes to simplify the Interest Coverage Ratio (ICR) it applies when assessing affordability. In line with the new regulatory requirements, (i.e. 4 or more mortgaged properties) will now be required to provide an assets and liabilities statement, together with a detailed schedule of all properties and loans outstanding. 2 Years accounts or HMRC SA105 will also be required A simplified BTL stressed interest rate will be applied at 5.5% (or 2% above pay rate, whichever is the higher), irrespective of application type or an applicant s tax status. The Interest Coverage Ratio (ICR) will now be calculated at 125% for Business BTL where the applicant is a basic rate tax payer. In addition, Consumer BTL, Regulated (Family) BTL, and -for- BTL remortgages, will all be calculated using an ICR of 125% of the monthly mortgage interest payment even if the applicant is a higher rate tax payer. For higher/additional rate tax payers, any Business BTL purchases, or Business BTL remortgage applications with additional borrowing, will continue to be calculated using an ICR of 145% of the monthly mortgage interest payment at the stressed rate. Melton Building Society

8 What are your underwriting requirements for For all applicants, you will need to individually provide details of each property a customer owns For (those owning four or more properties), additional information about their existing buy-to-let and rented properties, their landlord experience, use of letting agents and future portfolio plans NatWest These new questions are mandatory and MUST be completed to progress the application. However, until we launch our new buy-to-let calculator, this information will not be taken into account when assessing an application. We will be introducing our new buy-to-let calculator and revised Interest Coverage Ratio of 5.5% x 135% along with a number of other changes (see below) on Monday 25 September. Until these changes are introduced, the current criteria will continue to be used to assess each application. New Street New portfolio summary - outlining details of all the portfolio properties, including unencumbered and encumbered properties A straightforward business plan - outlining your client s plans for the portfolio Nottingham for Intermediaries Undecided Pepper Homeloans Undecided Platform Precise Mortgages The new forms referenced above will be available on the lender s website week commencing 25th September. The additional information required will be a Business Plan, Assets and Liability Statement and details of the existing residential property portfolio. Additional information can be supplied in any format including the lender s own forms.

9 What are your underwriting requirements for Principality Building Society Santander for Intermediaries Skipton Intermediaries Tipton and Coseley The Mortgage Works TSB Santander consider all applicants who are remortgaging without capital raising under transitional arrangements where the following criteria are met: Buy to Let property must have been purchased before 1 January 2017 No additional Buy to Let lending has been taken on or after 1 January Santander do not accept remortgage applications without capital raising that do not meet the above criteria. All properties must be self-financing so the rent must cover both 100% of the mortgage payment at the higher of our Buy to Let affordability rate, product rate or SVR (based on the chosen repayment method) plus monthly running costs. Portfolio landlords will require a minimum income of 45k. However, we will now allow rental income to be included in this total. Portfolio landlord affordability will be stressed at 5.5% (5% for 5 year fixed rate terms). Much of our existing criteria for remains the same - this includes landlords having no more than 10 properties in total and up to 5 BTL properties mortgaged with Skipton. We will share full details of our revised criteria, such as business plan requirements, next month Ask for three months' personal bank statements and a property schedule for all portfolio landlord applications to assess the risk associated with your customer s properties. To ensure that we can process your portfolio landlord cases in the most effective way, we re investing in a new online solution that will allow you to populate the portfolio property details, which will then be validated automatically and the results sent to our dedicated team of portfolio underwriters for assessment.

10 What are your underwriting requirements for Vida s proposition, to be launched on 28 th September, is summarised as follows: Vida Homeloans Vida's portfolio landlord definition is someone who has 4 BTL properties or more at application (including unencumbered properties). To reduce the burden on brokers, Vida will accept existing portfolio schedules to be uploaded if they contain its minimum information requirements. Vida will not require brokers to enter details on a thirdparty platform for portfolio cases. Vida will continue to require a minimum rental income vs mortgage payment ratio of 125%. When for remortgage, the notional rate is 5%, otherwise 5.5% applies. For a 5 year fixed rate, the cover is based on the product rate. Vida will continue to lend on a maximum of 15 properties with an increased maximum portfolio of 2m with Vida. Vida will continue to lend on HMOs and MUBs as part of its portfolio landlord proposition. Virgin Money Not lending to