Better rent cover on HMOs and Ltd Co lending 07.12.2009

Author: David Whittaker Posted on: 07 December 2009

Whilst HMO, larger freehold and Limited Company Buy to Let mortgages lending remains outside "vanilla" Buy to Let lending criteria the principle constraint is that commercial banks apply "varied" and tougher rent cover criteria. The first of several changes has improved the position ...

The standard equation now drops the requirement for capital cover within the calculation leading to a core equation of 130% at 7.5% (notional rate) on Interest Only. This works out to a simple 123 x monthly rent still subject to a loan no greater than 70% LTV. The borrower needs to be able to exhibit property experience - normally, involvement in 3 properties in the last two years.

This applies to Ltd Co lending as well as funding HMOs, large freeholds made up of commercial and residential elements as well as straightforward Buy to Let mortgages where works have been carried out but clients wish to refinance within 6 months of initial purchase.

 Call us on 0845 3456788 to discuss your funding needs.