Leeds Building Society brings in tighter lending criteria for borrowers
By |Published On: 8th December 2016|

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Leeds Building Society brings in tighter lending criteria for borrowers

By |Published On: 8th December 2016|

This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.

The Leeds Building Society has become the latest buy-to-let mortgage lender to alter its criteria for borrowers, ahead of amendments planned for next year.

The changes come as a result of new guidelines forwarded by the Bank of England, giving them greater powers of mortgage lending.

Changes to stress tests

From the New Year, lenders are permitted to assess if their borrowers can repay loans, should interest rates rise by 5.5%. In turn, borrowers must give evidence that their rental income can cover 145% of the mortgage outgoings. This means that in effect landlords will be able to borrow less.

One final change is that lenders must also take into account a landlord’s overall tax position, when agreeing whether to agree a mortgage. At present, the Bank of England demand has yet to be finalised.

Leeds Building Society will insist on an income coverage ratio for buy-to-let and holiday let mortgages of 140%, not 125%.

Leeds Building Society brings in tighter lending criteria for borrowers

Leeds Building Society brings in tighter lending criteria for borrowers

Richard Fearon, chief commercial officer at the society, noted: ‘We believe the combination of an income coverage ratio of 140 per cent, a specific and lower stress test rate for re-mortgages, our supporting criteria and market expertise brings a unique proposition to the buy to let market.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/12/another-buy-to-let-lender-introduces-stiffer-criteria-for-investors

 

 

About the Author: Em Morley (she/they)

Em is the Content Marketing Manager for Just Landlords, with over five years of experience writing for insurance and property websites. Together with the knowledge and expertise of the Just Landlords underwriting team, Em aims to provide those in the property industry with helpful resources. When she’s not at her computer researching and writing property and insurance guides, you’ll find her exploring the British countryside, searching for geocaches.

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