Last year, The Prudential Regulation Authority (PRA), the arm of the Bank of England that regulates banks and the financial sector, confirmed it would be bringing in tougher underwriting standards for buy-to-let lenders. These rules, which come into play on September 30th 2017 will affect landlords who have 4 or more mortgaged properties.
The PRA are implementing the new rules in the hope that it will result in riskier lending being avoided in the future as lenders will have to look at a landlords’ full financial exposure when assessing them for a mortgage.
These tougher standards will mean that lenders will have to look at a landlord’s income and mortgage details for their entire portfolio every time they refinance one of their properties, or purchase a new property. They could also request proof of rental income and a business plan to support their new application.
This will substantially increase the volume of work for lenders, which has led to warnings that this will result in lenders dropping out of this market. This will mean competition within the lending market will diminish and could negatively affect the landlords wanting to borrow due to higher rates and fewer options.
However, other loans, such as; holiday lets, bridging loans, property investment lending and corporate lending are exempt from the new underwriting standards.
If you are interested in becoming a buy-to-let investor, or increasing your portfolio and want to arrange a deal before the new rules take effect, contact us. We are independent mortgage brokers based in Neath and servicing clients UK-wide. As independent brokers, we can search the whole of the market to find you the best buy-to-let mortgage deal available. Call us on 01639 262222 or click here to send us an email.
Please be aware – your property may be repossessed if you do not keep up with repayments on your mortgage.