Buy to Let

Coventry loosens its landlord lending criteria

Coventry loosens its landlord lending criteria
Christina Hoghton
Written By:
Christina Hoghton

Coventry for Intermediaries has made it easier for landlords to borrow more.

The lender said it has enhanced affordability for landlords with changes to its reference rates on buy-to-let applications.

What’s changed?

Using the new calculations, a basic rate taxpayer receiving a rental income of £900 and choosing a five-year fixed rate could now borrow £181,895 – previously £157,091 – subject to the 75% loan to value limit.

The reference rates are now:

  • 4.75% (previously 5.5%.) for five-year fixed rates, for purchase and remortgage applications, or the product pay rate (whichever is higher).
  • If borrowers choose a two-year fixed rate the reference rate is the higher of the product pay rate or 5% (previously 5.5%), for remortgages with no additional borrowing.
  • 6.5% (previously 7%) for two-year fixed rates, for purchases and remortgages with additional borrowing, or product pay rate +2% (whichever is higher).

The minimum rental income required is either 125% or 145% of the mortgage payments, based on the applicable reference rate.

Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “Landlords help provide homes for those who are waiting to buy or simply not in a position to buy. Our affordability changes should help make it easier for new and existing landlords to finance their rental properties and help keep up with tenant demand.

“We try to make it as easy as possible easy for brokers to help their landlord clients, which is why we don’t ask for a minimum income – we simply look at rental income. Our Buy to Let calculator helps brokers easily see how much their landlord clients can borrow, and these new changes to our reference rate will likely mean many of those clients can borrow more if they need to.”