FHL raises rental calculation to 145%

Foundation Home Loans says it has "heeded the regulator's calls on affordability and stress testing" and is changing the basis of its rental calculation for individual applications from 125% to 145% next month. Limited Company BTL products remain unchanged at 125%.

Related topics:  Mortgages
Rozi Jones
16th May 2016
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Commercial Director Simon Bayley said:

"Foundation Home Loans supports the regulator’s intervention to enhance the way that individual landlords are protected by a more rigourous affordability system, but also recognise that experienced landlords are more than capable of assessing risks surrounding exposure to repayment of a loan in the event of rental shortfall."

Bayley added that as the restrictions on tax relief begin to bite and the increase in rental cover by lenders gathers pace, the advantages of limited company products will become clearer.

He added:

“There is no doubt that with the new restrictions on tax relief which landlords can claim back and now the hardening of the rental cover calculation, the limited company option is really gaining ground for a greater percentage of landlords, particularly those who are coming to BTL at this point.

"We have been delighted by the response to our Limited Company offering, which is priced at the same rate as our individual BTL products. Intermediaries and their landlord clients are recognising the efficacy of a limited company option and as long as there is a recognition of the pros and cons, the scales are coming down more heavily in favour of this approach."

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