Lenders will need to review the complete landlord’s portfolio when making a property application. Brokers are advising the landlords to get their mortgages ready for the new rules by the month of September 2017. New tax rules and lower tax relief are on discussion.
2017 has seen new rules on buy-to-let mortgages which is causing issues for landlords looking to expand new mortgages. If the interest rate were hit 5.5% the borrowers can afford the repayments.
Key Takeaways:
- The Prudential Regulation Authority, acting for the Bank of England, intends to put in place tougher requirements for lenders, in September.
- Under new laws, lenders will have to review a landlord’s entire portfolio of properties, even when making a decision vis a vis one particular property application.
- Newly instituted red tape could mean landlords must bend to lender’s request to review a business plan before getting final lender approval.
“Let’s say you have ten properties and eight are generating rental income in excess of mortgage payments and the other two are not, but the shortfall is covered by the other eight. Is that going to be acceptable? For some lenders it will be, for others it might not be.”