Tuesday, Apr 22, 2008
This is Significant
Cheltenham & Gloucester: Buy-to-Let policy changes from C&G
IGNORE THE LINK. See the first post
Posted by renting2 @ 09:09 PM (1760 views) Add Comment
11 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. renting2 said...
BTLers will now need income. This is a change from the lax policies of the past where rental income only was required, and no checks on stated income were made.
We are changing some of the details of our Buy-to-Let policy. From Wednesday 23 April, the following policy will be applicable to all new buy-to-let applications.
Total mortgage borrowing of £500,000 or less
If the amount your client wants to borrow will give them total mortgage borrowing with the Lloyds TSB Group of £500,000 or less, the maximum loan amount is calculated using either:
their income plus 50% of the expected rental income
or solely the expected rental income if:
their income (excluding rental income) before tax is at least £35,000 (sole or joint) and
the expected rental income is at least 120% of the monthly mortgage interest payment based on the current initial rate for the mortgage deal they choose.
Total mortgage borrowing of more than £500,000
If the amount your client wants to borrow will give them total mortgage borrowing with the Lloyds TSB Group of more than £500,000, the maximum loan amount is calculated using either:
their income plus 50% of the expected rental income
or solely the expected rental income if:
the expected rental income is at least 125% of the monthly mortgage interest payment based on the current initial rate for the mortgage deal they choose and
if the mortgage your client is applying for is £500,000 or less, then your client's income (excluding rental income) before tax must be at least £35,000 (sole or joint) or
if the mortgage your client is applying for is over £500,000, then their income (excluding rental income) before tax must be at least £50,000 (sole or joint).
Where all applicants are first time buyers:
their minimum income (excluding rental income) before tax is at least £35,000 (sole or joint) and
a maximum buy-to-let loan size of £500,000 is applicable.
2. Cityfool said...
Good lawd were the criteria every any more relaxed that THAT!!!!
3. titaniccaptain said...
Well spotted R2
the incentive totally removed from would be buy to letters yet seems to be offering a loan, great for the banks image
4. voiceofreason said...
This is fantastic news.
It is really saying "no more funny money is available for property".
Only real money, that means earnings plus some savings and a small percentage loan.
So those of us (ie most bubble bloggers here) who use earnings and savings to purchase e.g. the next house up the ladder can consider doing so at long, long last once this bubble has deflated (another 18 months or so my friends).
5. mark wadsworth said...
R2, good find, from where did you get comment 1?
I like this bit:
"the expected rental income is at least 120% of the monthly mortgage interest payment based on the current initial rate for the mortgage deal they choose"
When I started out in buy-to-let ten long years ago, the rules were "the expected rental income is at least 140% of the monthly mortgage interest payment based on a worst case scenario of 9%" with AFAICR, a minimum salary of £15,000 or so.
Which sort of half-way answers Cityfool's question. A bit, sort of.
6. bilko said...
Does anyone think that by effectively closing the door on BTL it will help enhance the value of existing BTL properties by making them a relatively rare commoditiy? While people continued to pile in it was good news for renters.
7. str 2007 said...
Bilko
No I don't think it will, the value is based on re-sale, if no-one else can come up with the value then it will drop.
The only saving grace for an early BTLer that hasn't got a high LTV portfolio is they should be making a profit over and above mortgage costs. This effectively allows them to use their portfolio as an annuity.
8. uncle tom said...
Looking at typical rents for typical BTL properties, this roughly equates to an LTV limit of 60% for those with less than £0.5m of loans and 57.5% for those with more.
In practice, a fair proportion of people with only one or two BTL's will qualify, but those who have a large 'portfolio' will be out in the cold.
The punters who have a dozen or so properties on 75-85% LTV's are staring into the abyss - they don't have enough rental income to pay the mortgages, and can't find buyers if they try to sell..
9. Greenbay said...
sorry to break it to you folks, but the income required can be on a self cert basis so its irelevant really....
10. This comment has been removed as it was found to be in breach of our Blog Policies.
11. dohousescrashinthewoods said...
I don't see that is comment 1.
If you are speculating, then it's worth adding that self-cert is probably being reclassified as fraud and if so, will be heavily investigated.
Cue "shock" BBC documentary and a rash of endowment-style cases in 3 years' time.