19 December 2016
As you will hopefully be aware the PRA Changes are starting very soon, and the lenders are ensuring they have made the appropriate changes prior to 1 January 2017.
Make sure you keep checking our BTL matrix here to see what all the lenders are doing.Some lenders have just announced their changes, details below.
From Friday 16 December they are increasing their rental calculations for new business from 125% of 5.50%, to 135% of 5.50%. They have also modified their rental calculations for landlords taking out a five year fix from 125% of 5%, to 135% of 5%.
Why are they doing this?
The need to ensure landlords can support all costs associated with managing a rental property means that they have to ensure they have robust calculations which take into consideration the costs a landlord will incur as detailed in the recently issued PRA supervisory statement for BTL lending.
The increase to their rental calculation will ensure that landlords are able to cover the costs of their mortgage repayments in a more challenging environment.
Please note that from Tuesday 2nd January 2017, they are updating the rental coverage calculations on their Buy to Let product range as follows:Core Range Current rental coverage 125% of 5.5% New rental coverage 145% of 5.5% HMO and MUB range - Specialist Distributor exclusives Current rental coverage 150% of 5.5% New rental coverage 175% of 5.5%
If you would like to submit a case on their current range, please complete the Decision in Principle as soon as possible, and submit full applications by 5pm on Friday 30th December.
Visit their website for latest details about our current products and criteria.
Please note that from Tuesday 2 January 2017, they are updating the rental coverage calculations on their range as follows:Current rental coverage - tiered rates from 115% to 125% of 5.5% New rental coverage - flat rate of 145% of 5.5%
To submit a case on their current range, please complete your application to produce a Decision in Principle KFI Letter as soon as possible. Full applications must then be submitted through our broker portal by 5pm on Friday 30th December.
To comply with the new regulations, from 1 January 2017,they will be introducing some changes to the way they assess buy-to-let applications. These can be summarised as follows:
Affordability calculation. Natwest will require details of a buy-to-let customer’s personal income to be submitted along with details of their current and expected rental income.
Online affordability calculator. Natwest will have a new online buy-to-let affordability calculator on their website that you can use as a guide to assessing your buy-to-let customers’ affordability. It is the same one as their underwriters will use, so if you receive a positive result from this, provided no information changes and all the details are accurate, you can expect a positive decision from their underwriters.
REFER decisions. From 1 January 2017 until the end of February 2017, all buy-to-let applications that are submitted, and are not immediately declined, will receive an automatic REFER decision. This does not mean that an application is likely to be declined. It purely means that, until their systems are updated, they will not be able to provide you with an immediate confirmed online ACCEPT decision until their underwriters have assessed it. However, if you use the online buy-to-let calculator (mentioned above) you will get a good idea of whether or not it will be accepted.
Rental cover calculation. The new calculation that you’ll need to use is 145% x 5.5%.
There are no changes to their buy-to-let lending criteria.
Buy-to-let applications received by close of business on 31 December 2016 will be considered on the current affordability assessment requirements.