The new ratio will be based on a nominal rate of 5.99% or the actual pay rate if higher up to 80% LTV. See the table below.
Maximum LTV Rental income to mortgage payment ratio required*
80% 125%
75% 120%
65% 100%
50% Non status
*Mortgage payment calculated at a nominal rate of 5.99% (or actual initial pay rate if higher) on an interest-only basis.
Commenting on the change, Paul Howard, associate director, Portman Group Intermediary Sales said, "I feel we are near the top end of the interest rate cycle and, whilst the Bank of England Base Rate has gone up several times in recent months, I believe we have covered this in our current calculation. There is an inherent strength in the buy-to-let market and this will continue. We have re-addressed the calculation on our buy-to-let products to reflect market expectations on interest rates."
