Bad news as one of the UK’s largest Buy to Let Mortgage Lenders makes significant changes to rental calculations and loan-to-values.
The Mortgage Works has reacted to other Lenders by tightening its lending criteria. The biggest change is around rental calculation which has hardened from 125% to 145%.
So what do these changes really mean? For example: someone looking to get a £200,000 Buy to Let Mortgage from The Mortgage Works will need an extra rental yield of £166.33 per calendar month.
Table providing examples of the impact of Rental Calculation Change
| Loan | Monthly mortgage payment* | Current Rental Formula (125%) | New Rental Formula (145%) | Extra rent now needed pcm |
| £150,000 | £623.75 | £779.69 | £904.43 | £124.75 |
| £200,000 | £831.67 | £1,039.59 | £1,205.92 | £166.33 |
| £300,000 | £1247.50 | £1,559.38 | £2,261.10 | £249.50 |
| £500,000 | £2079.17 | £2,598.96 | £3,014.79 | £415.83 |
*Based on an interest only loan TMW at 4.99% (their standard stress tested rate).
Other changes with The Mortgage Works
The Mortgage Works is also withdrawing from 80% loan to value lending from the same date thus increasing the minimum buy to let deposit to 25%.To be honest, unlike the rental calculation change, I don’t think this move will have much of an impact as it was hard to make the rental calculation fit on the 80% product and the rates were pricey when comparing them to their 75% offering.
As one of the U.K.’s leading buy to let mortgage brokers we have access to many lenders still offering 80% buy to let products as well as other lenders who are still working out rental calculations more favourably. Many buy to let lenders are now choosing to not operate directly with consumers and hence we are here at hand to deal with existing The Mortgage Works customers and many other lenders.
For more information on The Mortgage Works or getting a buy to let mortgage, please call us on 020799 2004
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Finance Brokers In London. His role is very much focused on Property financing both on residential and commercial lines.
You can call Payam on 020 7993 2044 or alternatively complete the enquiry form so he can personally get in touch with you.
Niche Advice is not tied to any bank, building society, estate agent or insurer and offers Independent Mortgage and Insurance advice.