Another Buy-to-Let Lender Tightens Criteria
Godiva Mortgages, part of Coventry Building Society, has announced that it is introducing tougher criteria for buy-to-let landlords.
At present, Godiva requires buy-to-let borrowers to have a rental cover of at least 125%, with the interest rate calculated at 5%, regardless of the pay rate.
However, landlords with a deposit of less than 35% will now be required to have rental cover of 125%, calculated on a higher rate of 5.5%.
For those taking out a five-year fixed rate deal, the change will not apply.
The announcement arrives after the Bank of England (BoE) released a report that suggests it may intervene in the buy-to-let market. This could come in the form of new affordability rules or lending caps.
Barclays has already tightened its lending criteria for buy-to-let borrowers. It recently raised the rental cover required by landlords from 125% to 135%, calculated on a pay rate of 5.79%. Find out more here: /barclays-is-first-major-lender-to-tighten-buy-to-let-criteria/
SPF Private Clients’ Mark Harris predicts: “The market is moving towards a situation where only those with a 50% deposit are likely to qualify for a loan.”1
What do you think of the changes and will these affect your future investments? Keep up to date with all things buy-to-let finance at LandlordNews.co.uk.