The move is aimed at providing a simple and more competitive approach to rental calculation.
Minimum interest cover will reduce from 130 per cent to 125 per cent and interest will now be calculated at a nominal rate of 5 per cent instead of the product rate.
For example, this approach based on a rental income of £750 per month will allow a customer to take out £144,000 maximum borrowing, compared to £122,750 under the previous policy.
Andy Gray, head of mortgages for the Woolwich, said: “The changes we have made to our lending policy show that we are committed to the buy-to-let market and we want to ensure our products are competitive in the market place. Overall we now compare very well with our major competitors.
“We have been working hard with our risk teams to ensure that we offer competitive products which allow customers to borrow the money they require whilst ensuring that the borrowings offer sensible levels of cover from rental income, giving customers the best of both worlds in what is a good market at the moment.”
