Lending Criteria – Buy to Let
- BTL Applicants
- BTL Employment and Income
- BTL Minimum Income
- BTL Applications Based on Rental Income (Standard and Ex Pat)
- BTL Applications Based on Affordability
- BTL Tenancy Agreements and Occupancy
- BTL Exposure
- BTL Property Requirements
- Ex Pat Requirements
- Ex Pat Identification and Verification
- Ex Pat Acceptable Countries
The following are not acceptable for BTL applications:-
- Where the mortgage introducer is also the applicant
- Where the applicant is related to the vendor
In addition to the standard criteria used for assessing Employment and Income the following is applied to BTL applications.
The Society offers 3 different types of BTL lending;
- Ex Pat
Standard and Ex Pat are not regulated and as such are subject to slightly different criteria in terms of evidencing income and affordability.
This table summarises what income can be used to support the differing applicant types:-
|BTL Lending Type||Rental Income Assessment||Affordability
Where rental income is insufficient
All BTL applicants are required to meet the below minimum income levels.
|Loan Amount||Minimum income requirement – basic/pension (gross)|
|Loans up to £200,000||£20,000|
|Loans from £200,001 – £300,000||£40,000|
|Loan for £300,001 – £500,000||£55,000|
Income from housing allowances, rent allowances and state benefits are not considered.
Rental income based lending is not applicable for Consumer/Regulated Buy to Let mortgage (please refer to BTL applications based on affordability)
Rental income (as confirmed by the valuer) must equate to 145% of the mortgage payment (interest only) which is based upon the a minimum interest rate of 5.5% OR initial product pay rate plus 2% (whichever is the greater)
Example: £100,000 x 5.5% x 145% = £7975/12 = £665.58 (the rental income confirmed by the valuer must be equal or more than this figure)
For cases where this requirement cannot be met a full affordability assessment is required.
For Ex Pat BTLs a copy of the AST and the latest 3 months bank statements are required to evidence rental income if applicable.
For all Consumer/Regulated BTL applications and Standard BTL where the rental income (confirmed by the valuer) does not meet the rental criteria, a full affordability assessment is required.
The following criteria will apply in addition to the standard Affordability Criteria.
|Rental Income – New BTL||
|Rental Income Existing BTLs||
|BTL Mortgage Payments||
|Residential Mortgage Payments||
The property must be:-
- Available to let immediately and remain available for letting throughout the term of the mortgage.
- Let on an Assured Shorthold Tenancy for a minimum period of 6 months and a maximum of 12 months.
The following tenants/tenancies are not acceptable
- For traditional BTL applications only – renting to family members
- Multiple tenancies
- Student lets or Holiday lets
- Asylum seekers
- Sale and leaseback arrangements
- Maximum portfolio exposure to Hanley Economic Building Society is £500,000
- No more than 3 Buy to Let properties in total (this includes unencumbered properties)
- BTL properties must meet a minimum EPC Standard acceptable rating of A – E only
- Applicants must have held a current UK bank account for a minimum of 3 years at the point of application
- Applicants must not have lived in the property or have any intention to live in the property in the future
- Applicants must use a UK Solicitor
- Applicants must engage a Managing Agent to oversee the property. Full details to be provided on application
- Applicants must make mortgage repayments in GBP from a UK bank account in the borrower’s name
In addition to standard Identification and Verification, the following additional criteria applies to Ex Pat applications;
- 3 separate documents are required as proof of current address
- 3 years consecutive address history (to be recorded on the mortgage application form)
- Proof of last UK address
- Original documentation must be certified by the applicant’s overseas bankers or solicitor/notary in their country of residence
- The introducing intermediary cannot certify these documents
Applicants from Ex Pats residing in the following locations are permitted.
|Czech Republic||Hong Kong SAR||Lithuania||Portugal||United States|