From 11 May its max LTV with be 75% in response to tax relief being cut from 45% in April 2017 to 20% by April 2020.
The Mortgage Works will stop offering products at 80% loan-to-value from next month in response to impending reductions in mortgage tax relief.
From 11 May its max LTV with be 75% in response to tax relief being cut from 45% in April 2017 to 20% by April 2020.
The lender, which is the specialist buy-to-let arm of Nationwide Building Society, will also increase its rental cover from 125% to 145% on all applications.
Paul Wootton, managing director of TMW, said: “As a responsible lender, this change is a proactive move that recognises the need to help safeguard rental cover for landlords over the coming years, and in advance of the forthcoming changes to mortgage interest tax relief.
“TMW, as part of Nationwide, already robustly assesses the affordability of its buy-to-let mortgages against stress rates that are considerably higher than the borrower’s existing rate.
“The increase in the rental cover requirement is designed to strengthen this cashflow position even further, and help them withstand the impact of increased costs from the new tax regime.”
David Whittaker (pictured), managing director of Mortgages for Business, said: “I'm not surprised. This is the direction of travel for the sector and I've been on the road in recent weeks attending trade show for brokers and investors forecasting that lenders would start to increase their income cover ratios for individual borrowers.
"As one of the biggest mainstream buy-to-let providers, TMW is taking the lead and demonstrating to the market and the regulators that it truly understands the forthcoming tax relief changes. It will be interesting to see how other providers react. I anticipate a few will be making similar preparation, some will wait until the outcomes of CP11/16 are known and others will bury their heads in the sand.
"ICRs on products for limited companies will remain generally the same as they are now because these borrowing vehicles will not be subject to the new tax relief restrictions. Indeed, it will be the lenders with products in this category who will be the likely winners out of this in the long term.”
