Intermediary News

Changes to BTL ’Follow-on’ rates and FSCR affordability, and stress test rates for all products

Further to our email yesterday, we are pleased to confirm the following changes relating to:

Buy-to-Let (BTL) changes for UK residents:

  • The ‘stress rate’ for all UK resident BTL 2 year fixed term products has now reduced to 7.75% from 3% over the product rate offered
  • All 5 year fixed term products (standard BTL, HMO or MUFB) continue to be stressed at the product pay rate

Buy-to-Let changes for UK Expats:

  • The Finance Service Cover Ratio (FSCR) for UK Expat BTL applicants has changed depending on whether the customer is a UK or non-UK taxpayer:
    • For UK Expat individuals who are non-UK taxpayers the FSCR rate is now 130%
    • If the UK Expat applicant is a UK taxpayer the ICR remains for UK basic rate taxpayers at 125% and higher rate/additional rate taxpayers at 145%
  • The stress rate for BTL 2 year fixed term products is now 7.75%, reduced from 3% over the product pay rate
  • All 5 year fixed term products (standard BTL, HMO or MUFB) continue to be stressed at the product pay rate
  • Limited companies are now 130% (Individual and Portfolio BTL) and for HMO and MUFB it remains unchanged at 145%
  • The ‘Follow-on’ rate for all standard BTL products for UK Expat customers is now SVR+1%, reduced from SVR+1.5% previously, bringing the rate in-line with our UK BTL ‘Follow-on’ rates
  • The ‘Follow-on’ rates for all HMO and MUFB products continue to be charged at a margin of 1.75%

Buy-to-Let changes for International residents:

  • The stress rate for BTL 2 year fixed term products is now 7.75%, reduced from 3% over the product pay rate
  • All 5 year fixed term products (standard BTL or MUFB) continue to be stressed at the product pay rate
  • The FSCR for International resident applicants is now 130% For MUFBs it remains unchanged at 145%
  • The ‘Follow-on’ rate for all standard BTL products for International resident customers is now SVR+1%, reduced from SVR+1.5%, bringing the rate in-line with our UK BTL ‘Follow-on’ rates
  • The ‘Follow-on’ rates for all MUFB products continue to be charged at a margin of 1.75%

Home Purchase Plan product changes:

  • For fixed term products below 5 years, Home Purchase Plan (HPP) products are stressed at 7.50%, reduced from 3% over the product pay rate
  • For fixed terms of 5 years, the products are stressed at the product pay rate

Our updated finance criteria can be found here.

Please note, to provide advice on HPP products you are required to hold specific HPP permissions with the FCA.

If you have any queries or require further information our team remains available via phone and email, details of which can be found here.

Thank you for your continued support.