Coventry for Intermediaries has unveiled its transitional buy-to-let affordability policy for remortgagers.
The building society’s move is welcome news for so-called ‘mortgage prisoners’ – landlords who took out loans before more stringent affordability rules were introduced by the Prudential Regulation Authority (PRA) on 1 January.
The PRA rules mean such landlords may find themselves unable to remortgage, leaving them trapped on the lender’s standard variable rate.
Coventry will apply an income coverage ratio (ICR) of 125 per cent with a reference rate of 5 per cent where applicants have a total gross annual income of less than £40,000.
For borrowers with a total gross annual income of £40,000 or more, or higher or additional rate taxpayers, the ICR will be 140 per cent with a reference rate of 5 per cent.
The 5 per cent reference rate will be applied providing no additional borrowing is required.
Kevin Purvey, director of intermediaries at Coventry, 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.”