It lowers ICR to 125% for basic rate taxpayers
Virgin Money has made changes to its buy-to-let lending policy, reducing its interest cover ratio (ICR) and adjusting its stress rate calculations to improve affordability assessment.
The lender’s ICR has been lowered to 125% for basic rate taxpayers remortgaging with no additional borrowing and those purchasing or remortgaging with additional borrowing.
The ICR for higher or additional rate taxpayers remortgaging with no additional borrowing was reduced to 125%, while those purchasing or remortgaging with additional borrowing, the ICR was set to 145%.
Virgin Money also improved its stress rate calculations for both portfolio and non-portfolio landlords.
On five-year fixed rates or less and variable rates, the lender set the stress rate for those remortgaging with no additional borrowing to the higher of 5% or pay rate plus 1%, while for those purchasing or remortgaging with additional borrowing, the stress rate was set to the higher of 5.5% or pay rate plus 2%.
On five-year fixed rates or more, Virgin Money set the stress rate for those remortgaging with no additional borrowing to the higher of 5% or pay rate plus 1%, while for those purchasing or remortgaging with additional borrowing, the stress rate was set to the higher of 4.5% or pay rate plus 2%.
Virgin Money’s two-year fixed buy-to-let deals start at 5.76% while the five-year options start at 5.32%, so stress rates start from 6.76% & 6.32% respectively.
“A vibrant rental sector plays a key role in the wider mortgage environment, and as such, we have made changes to our Virgin Money buy-to-let mortgage lending policy,” said Craig Calder, head of secured lending at Virgin Money.
“We continue to evolve our mortgage policy and these changes ensure that we are supporting landlords through an improved affordability assessment.”
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