The new calculation works on the anticipated rental income being equal to at least 125 per cent of the monthly mortgage payment on an interest only basis, calculated at the Bank of England Base Rate plus 1 per cent. It is aimed at the more professional landlord who has a number of buy-to-let properties which they manage on a self-funding basis.
As an alternative, UCB Home Loans will continue to offer its existing calculation, which allows the customer to use a combination of their earned income as well as the anticipated rental income.
The move is designed to inject flexibility and choice into the lender’s underwriting processes, and is a clear indication that it is committed to the buy-to-let market, responding to the needs of the more professional landlord as well as new landlords. It is designed to allow the customer to choose which calculation best suits their individual needs, rather than the ‘one size fits all’ approach.
“We are doing this as a result of increasing demand from brokers to create a system which caters for the differing needs of investors in the buy to let sector,” said UCB Home Loans managing director, Keith Astill. “Both calculations deliver a responsible approach to lending, with the new self-funding option being more suitable for borrowers with larger property portfolios, or maybe those who are retired.” He added: “This is just the first step in our expansion plans for buy-to-let, and it sends a clear message that we are committed to this growing sector of the mortgage market.”
