A reference rate of 5% will be applied provided there’s no additional borrowing.
If each applicant individually has a total gross annual income below £40,000, an income cover ratio (ICR) of 125% will be applied.
Applicants with a total gross annual income of £40,000 or above, or declares they are a higher or additional rate tax payer, will have an ICR of 140% .
Kevin Purvey (pictured), director of intermediaries, said: “We’re delighted to be making positive changes by introducing our transitional buy-to-let affordability policy. We believe that the changes will provide more choice for brokers and their clients.”
“And following on from our announcement that we’re committed to continuing to lend to portfolio landlords, we’ll be announcing the details of our approach to this soon.”