Borrowing: six months ago versus today

Paul Martins, consultant mortgage broker looks at what your rental income would get you today in terms of borrowing compared with six months ago.

Buy to let stress tests are changing for individual borrowers and unfortunately not for the better...

Six months ago the stress test calculation used most widely would have been 125% @ 5%, something I’m sure many of you are familiar with. In recent months the majority of lenders lending to individual borrowers have increased this to 145% @ 5.5%. So, what does this mean in terms of borrowing?

Six months ago

Annual rental income RTI

Max loan amount

£12,000 125% @ 5% £192,000
£18,000 125% @ 5% £288,000
£24,000 125% @ 5% £384,000


Annual rental income RTI

Max loan amount

£12,000 145% @ 5.5% £150,470
£18,000 145% @ 5.5% £225,705
£24,000 145% @ 5.5% £300,940

Some lenders have even increased their interest rate to 6%, which decreases amount you can borrow even further.

Don’t panic – you still have time to benefit from the lower stress tests, but you need to act now. There are a select few lenders who impose the 125% calculation to individual borrowers, but we can’t promise they will be around for long, so do get in touch ASAP to discuss your future plan.

It is worth bearing in mind that these increases are only applicable to personal borrowers and not limited companies. For more information on stress tests for limited companies take a look at the following blog:

Stress tests: why you can borrow more via a Ltd Co

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Why are stress tests changing?

Lock into a rate with a low RTI now and complete in 2017