It will mean that when applying for mortgages for new properties, most landlords with three or more mortgaged properties that they rent out, will need to give much more information regarding their existing properties, assets, income, liabilities and costs.
How will things change?
At the moment the majority of lenders focus mainly on the value and rental income of the property they are lending against when underwriting buy to let mortgages.
With the new underwriting requirements from the BoE, all lenders will need to collect and validate information regarding every property that the landlord has an interest in when considering their application. This will include collecting information on rental income, property values, mortgages and costs from each and every property the landlord owns.
The reason the BoE has asked lenders to change their approach is that they want lenders to have a full understanding of the financial circumstances of landlords with multiple properties and the impact that any new lending might have on their finances.
Why might this be challenging?
Going forward all lenders will need to collect full and detailed information on a landlord’s finances at the application stage. This will include a full range of their economic activity. Most lenders will need to ask a greater number and more in depth questions and carry out far more validation that they do currently. On a very basic level, this means a landlord’s application process will be more complicated and time consuming.
Depending on your economic activity, it could of course also mean that mortgages that may have previously been approved, will now be turned down.
How can Limetree help?
Limetree has nearly 30 years of expertise when it comes to buy-to-let mortgages and professional landlords. As a result, we are well qualified to cope with these changes and are already working hard to ensure any impact on our landlord customers is minimal.
Seeking advice from Limetree will be quicker, easier and will often deliver the results you want, even after 30 September 2017.
Where can you find out more?
If you’d like to know more about the PRA affordability rules and how they might affect you, please give us a call.
Alternatively, you can find the full PRA buy-to-let underwriting standards expectations on the BoE website.