BARCLAYS NEW BUY TO LET MORTGAGE POLICY

February 2, 2015 by in category Mortgage News with 0 and 0

Use of disposable income to cover any shortfall in its rental cover calculation is now being allowed by Barclays as it loosens its buy-to-let lending criteria

Up to now Barclays has used a rate of 5.79 per cent to assess affordability, as opposed to the mortgage rate itself. For example, a £200,000 loan on a 3.29 per cent fixed rate would require a rental income of £1206 a month to cover the mortgage (£200,000 x by 125% x 5.79% per cent divided by 12).

Now, as long as it is provable, applicants may use their own disposable income to guarantee any shortfall in that calculation.
“This is a sensible approach to adopt because as with any lending decision, you should always take into account the borrower’s financial circumstances, says Barclays chief executive Andy Young.

“That may come from different sources and I think this is a far more sensible way to underwrite buy-to-let purchases. I’d like to think other banks will follow suit.”

Whilst Barclays managing director of mortgages Andy Gray says: “There are only a handful lenders that allow any shortfall in the rental income used to calculate affordability to be met by the applicant’s disposable income. Barclays’ new policy provides a greater opportunity for those planning for their financial future and choosing to invest in rental properties to help support their longer term goals of, for example, paying for their children’s’ university fees or enhancing their lifestyle in retirement.”

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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

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