Keystone introduces split BTL stress tests

Keystone Property Finance is introducing separate stress tests for individual and limited company borrowers.

Related topics:  Mortgages
Rozi Jones
12th May 2016
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Individuals will face tests of 145% at pay rate or notional rate of 5.25%, whichever is higher, which will be applied to term trackers and 3 year fixed rates. Pay rate will be used for 5 year fixed rate borrowers.

Stress tests for limited companies will remain at 125% of pay rate or a notional rate of 5.25%, whichever is higher, for term trackers and 3 year fixed rates. For limited company borrowers choosing 5 year fixed rates, the pay rate will also be used.

The change in policy applies to products in the Classic Range which is funded by Paratus AMC and will come into effect on 14th June 2016.

David Whittaker, managing director of Keystone said:

“We are keen to demonstrate that we take borrowers’ affordability extremely seriously and have been working on this criteria update with Paratus AMC for some weeks now.

“Crucially, individual borrowers who can show that they are basic rate tax payers now – and are likely to be in future – can ask for the lower stress test to be applied. These applications will be considered on a case by case basis. Our underwriters will assess the individual’s circumstances and portfolios very carefully and ask to see the last two years’ tax returns to prove that income is within the lower tax bracket limits.

“The stress test for limited company applicants will remain at 125% of pay rate because corporate vehicles will not be financially affected by the new tax relief restrictions."

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