Hinckley & Rugby announce new rules on BTL lending

Hinckley & Rugby announce new rules on BTL lending

Hinckley & Rugby Building Society has announced its new lending policy for Buy to Let mortgages for the New Year.

The changes centre on the rental stress tests for investor mortgages, to comply with the new requirements from the Prudential Regulatory Authority which apply from January 1 2017.

Applications received from New Year’s Day will be stressed at a higher rate, initially 5.5%, with a coverage requirement of 145%. This compares to the existing current requirement of 135 per cent at pay rate plus 2.0%.

One exception to this is Hinckley & Rugby’s five-year fixed rate products, which have a requirement of 145% coverage at pay rate (currently 2.75% at 60% LTV) rather than the stressed rate.

The Society will, however, continue to consider applications which don't meet these thresholds by taking into account personal income to cover the rental shortfall. The ICR (interest coverage ratio) would then be an absolute minimum of 145% at pay rate, and an affordability assessment would consider verified income and expenditure.

Carolyn Thornley-Yates, Hinckley & Rugby head of intermediary sales, had this to say: “At Hinckley & Rugby we recognise that good quality buy to let applications aren’t defined solely by the amount of rental income generated, and that there are instances where the personal ability of the borrower is more than sufficient to support a small portion of the loan, now and in the future.

Our manual approach to underwriting allows us to consider individual situations in depth, making prudent lending decisions tailored to the borrower’s needs and circumstances”.

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Latest Comments

MBM Homelets
MBM Homelets 23 Mar 2017

Although this is a very positive step, there is little or no guarantee of the standard of workmanship employed by the tenants. We have had experience of a professionally decorated property being ' painted'...

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ajay 21 Mar 2017

How is the "robust evidence" looking now?

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I've been watching the series so far and am completely baffled by the cases that were presented. Though, I don't think that we can protect ourselves from every scam possible - it will just make the scammers...

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Landlady14 01 Mar 2017

You would think so Niraj Shah! My experience only proves that there are varying qualitiers of professional in all aspects of property letting. None of the ones I have dealt with, from letting agents to...

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Mark 01 Mar 2017

Thanks for this article. Hopefully one day everybody's lifestyle will be eco-sustainable.

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Ben Taylor
Ben Taylor 28 Feb 2017

I was convinced that London was the most expensive!

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Alan Read
Alan Read 28 Feb 2017

Australia are leading the way in this I think. The trouble with Britain is we don't get enough sun to make use of solar power.

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James Powell
James Powell 27 Feb 2017

This is a very good news.

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DanHumphreys 27 Feb 2017

It sounds like a good idea. Anything to help the younger generation get a foothold.

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Matt 20 Feb 2017

Is this fake news?

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Matthew Hollywood 07 Feb 2017

Matthew Hollywood - Director Mishon Mackay Land & New Homes - Brighton The shortage of New Homes is in part effected by the lack of land sales. Land sales are held back because there is a disparity between...

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Hi Graham, Would be interesting to see the above figure calculated against an investment via a Lt Company /SPV structure and if the investor found themselves pushed in to the higher tax bracket. Mortgage...

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