The policy changes will 'provide a simplified and more competitive approach to rental calculation in the BTL market' according to the lender.
The minimum interest cover will reduce from 125 per cent of a nominal rate of 5 per cent, to 105 per cent of the pay rate of the product selected for all customers. For example the new approach based on a mortgage of £200,000 on Woolwich's 5.49 per cent two-year fixed rate would require a monthly rental income of £960.75, as opposed to £1,041.66 under the previous policy.
Andy Gray, head of mortgages for the Woolwich, said: “We know that the demand for rented property is very strong in many areas as high property prices are forcing potential home buyers out of the market and into the rented sector. But despite continuing high prices, and forecasts of a slowdown in house price inflation, there is no actual expectation in the market of price falls, therefore the buy to let market still remains very popular as a long term investment strategy for many people.
“Our strong lending position means we continue to maintain very competitive buy to let rates, and are also taking the opportunity to make our lending conditions even more competitive, to enhance our position as one of the market leaders in BTL.”
The new policy applies to all customers, whether borrowing as private individuals, special purpose vehicle limited companies or limited liability partnerships .
Key policy features include:
- New - Improved rental cover criteria – minimum interest cover 105 per cent of the pay rate of the product selected.
- Proof of income and proof of mortgage payments will not be required on individual loans up to £500k, LTV under 75 per cent and where a customer’s Woolwich BTL aggregate debt does not exceed £1m . In addition for these customers there will no longer be a requirement to have a minimum income of £20,000.
- Borrowers can build a portfolio of properties up to an aggregate of £5 million with no limit on the number of properties.
- Loan on individual properties up to £2.5m considered.
