New buy-to-let mortgage rules are coming into effect at the end of this month with a focus on lending requirements. Here is everything you need to keep in mind ahead of the crackdown:
Lenders will review your entire property portfolio:
At the end of this month, tougher rules and regulations will be enforced for portfolio landlords. When applying for a buy-to-let-mortgage on a new rental property, lenders will need to look at your entire portfolio for a single property application. Your whole portfolio must be viable for your application to be successful. This will have an impact on landlords who own several properties, especially if some of them are not turning as much of a profit. Those new rules will mean that landlords might find it a bit more challenging to get a good mortgage deal.
A new stress test on buy-to-let mortgages will be introduced:
If you are a portfolio landlord planning to take out another buy-to-let mortgage, you will need to be ready for the new stress test. Lenders will have to check that borrowers can afford repayments if interest rates rise to 5.5%. Landlords will be asked to provide lenders with a full breakdown of their rental properties alongside a business plan to support their application and other legal documents.
Who will be affected by the new rules?
The changes are part of former chancellor George’s Osbourne’s policy to help first-time buyers step on the property ladder. The new rules should not affect landlords planning on maintaining their existing portfolio but will have an impact on those looking to purchase new properties and those looking to remortgage one of their properties.
To find out more about the changes mean for you, or for any other property requirements, give our team a call on 020 7078 0214, or send an email to firstname.lastname@example.org.