Newcastle tightens its buy-to-let mortgage criteria
Newcastle Building Society is the latest lender to tighten its buy-to-let mortgage criteria making it harder for landlords to secure large enough mortgages.
The lender has increased its rental calculation from 125% on a reference rate of 5%, to 145% of 5.5%. It has also capped the maximum number of investment properties from five to three.
Aaron Strutt, product manager at Trinity Financial, says: “Newcastle’s change may not sound particularly drastic, but it means the mortgage amount will be fairly drastically reduced.
“If you had a property that generated £1,000 rental income each monthly you would have been able to borrow £192,000 but the tougher criteria means this will be reduced to £150,470.”
In a note to brokers, the society said the change reflects the forthcoming hikes to tax relief that will affect individual buy-to-let investors from 1st April 2017 and the requirement to ensure that all costs associated with a rental property are fully accounted for.
For help to secure a buy-to-let mortgage, call Trinity Financial on 020 7016 0790.
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