Lender lowers rental calculations to 100%

Buy-to-let landlords who want to add one or two more properties to a small portfolio and have good earnings of their own, may be able to take advantage of a new deal that allows 100% rental income to cover the monthly mortgage payments, and not 125%.

NatWest Intermediary Solutions is revising its rental calculation for buy-to-let mortgages.

It will mean that buy-to-let mortgage applicants who can demonstrate they have the financial means to cover rental voids and buildings maintenance, and have no more than three buy-to-let properties in total, may be able to take advantage of the reduced rental cover calculation of 100%, instead of the industry norm of 125%.


Graham Felstead, at NatWest Intermediary Solutions, said: “Having reviewed the current market dynamics, we believe there is an opportunity to increase our buy-to-let lending in the small portfolio, higher income sector of the market, where landlords can demonstrate that they have the financial means to cover costs such as rental voids and buildings maintenance from their own resources.


“Recent statistics released by the Council of Mortgage Lenders show that the buy-to-let market is improving, with the number of new loans rising by 16% in Q3, but it’s by no means a homogenous sector.

“The performance of geographical regions and portfolio types will differ, so it’s important not to get too carried away. From a lender’s point of view, it’s important to balance the mix of business you attract.

“We have focused our buy-to-let lending on broker clients with smaller portfolios, rather than the professional landlords’ sector, so this improved rental calculation should prove to be attractive to intermediaries who have clients operating in this sector of the market.”


An applicant fitting the criteria looking to borrow £200,000 would need to generate £240 less in monthly rental income than previously. Even for a loan of £60,000, it would result in a reduction of £71 in the monthly rental income requirement.

The previous monthly rental income required was 125% at 6.75%; the new one will be 100% at 7%.