New criteria is in from Virgin Money who will now lend to ‘Portfolio’ Buy to Let Landlords. Portfolio landlords are defined by having 4 or more mortgaged rental properties including the property they are making the application for.
Portfolio landlords will be assessed against additional criteria and need to provide some extra documentation to prove affordability and the additional criteria is quite lengthy.
Virgin Money Portfolio landlords criteria:
- Max 75% LTV on the property to be mortgaged.
- Max five BTL mortgages with Virgin Money, or £3m.
- At least 24 months experience of letting properties is required at the time of application.
- Personal income can’t be considered for any property rental shortfalls.
- Max portfolio of 10 mortgaged BTL properties across all lenders, including the new application.
- In total the portfolio must not exceed 70% LTV, with a minimum interest cover ratio of 145%, at an interest stress rate of 5%. If there are any mortgage free properties, the equity and rental income on these will be taken into account. This excludes the new application.
- Max five properties either mortgaged or mortgage free and including the new application, can be within the same postcode area e.g. NE3, EH2.
- Max two BTL properties (either mortgaged or mortgage-free) purchased in the last 12 months, including the new application.
Stress and affordability testing:
- Evidence required of a minimum personal combined gross income of £25,000. This excludes income received from BTL properties.
- The rental income must cover 145% of the mortgage interest. This will be calculated in one of the following ways:
All products will be calculated at a notional rate of 5.50%, except five year fixed rate products. Five year fixed rate products will be calculated at 5.00%.
- The rental income for a BTL remortgage with no additional borrowing must cover the mortgage payment by 125%, calculated at a notional interest rate of 5.50% across all products.
- Personal income can’t be considered to meet any rental shortfalls for portfolio BTL.
There is a very wide range of products available, but interest rates depend on the Loan to Value, Fee costs, product term, early redemption penalties etc.
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