Castle Trust is the latest lender to announce its new portfolio landlord lending approach, ahead of the Prudential Regulation Authority’s (PRA) underwriting standards that will come into effect from 30 September.
From this date, Castle Trust will require brokers to complete a new portfolio landlord statement for clients who own four or more mortgaged properties.
The new portfolio landlord statement will include the following: an asset liability statement, a property schedule and a business plan.
Castle Trust’s underwriters will then apply a stress test to assess the position of the entire portfolio. In a statement, the lender explained: “Where there is a shortfall, we will take a view depending on how many properties this affects, the strength of the portfolio and the broader financial circumstances of the applicant.”
The stress tests that Castle Trust will apply are as follows:
Holiday lets are subject to a 150% stress test at the relevant pay rate.
Matthew Wyles, executive director at Castle Trust group said:
“The PRA’s requirement for underwriters to take a proportionate approach to portfolio landlords, based on their knowledge of the borrower, is simply an articulation of sound commercial lending.
“Castle Trust has always specialised in larger, more complex buy to let portfolios and so the provisions of SS13/16 are just business as usual for us.
“This said, it is important that we are clear and transparent with the market and so, by laying out our approach and the portfolio rental calculations that we use, we can eliminate any element of doubt.”
Further information regarding Castle Trust’s lending criteria can be found on its website.
You may also be interested in:
OneSavings Bank signs eTech's new Buy to Let Hub
Specialist lending group OneSavings Bank (OSB) has signed leading property risk software developer eTech to design and implement its new online portfolio submission platform ahead of the PRA’s changes to portfolio landlord underwriting standards, that come into effect from 1st October.
Shawbrook Commercial aligns systems with new PRA requirements
Shawbrook Commercial Mortgages has already implemented the required revisions to its processes and systems to ensure they fall in line with the new PRA underwriting standards that come into effect from the 1st October.
How Aldermore will underwrite portfolio landlords
As of 1st October 2017 lenders will need to implement a more thorough underwriting process when considering mortgage applications from portfolio landlords, i.e. where the borrower has, or will have more than four mortgaged residential buy to let properties.
The Mortgage Works & Paragon break silence on lending to portfolio landlords
Chris Longhurst describes how these lenders will meet new PRA requirements
FAQs on Ltd Co borrowing for buy to let
Frequently asked questions on limited company borrowing for buy to let mortgages.
How the new buy to let underwriting standards will affect lenders and borrowers
Steve gives his views on what the implications of tougher interest cover ratios and increased background checks will mean for landlords and buy to let lenders.