Foundation Home Loans has announced new enhancements across its buy-to-let (BTL) product range, including changes to its interest coverage ratios (ICR) and maximum loan sizes.
The intermediary-only specialist lender introduced a new ICR for basic-rate taxpayers – which reduces from 145% of rental income to 125%.
Foundation revealed affordability will still be calculated at pay rate for the lender’s five-year fixed rate products, but at the lower ICR level of 125%, while the rental calculation for all other rates is 125% at 5.5%. The lender said its ICR of 125% for limited company borrowers will remain unchanged.
Foundation also announced it has increased maximum loan sizes across its entire product range – including for HMOs, multi-unit blocks and short-term lets – at both 65% and 75% LTV.
The latest criteria changes followed Foundation’s introduction of greater flexibility to landlord borrowers that were announced last month – such as assessing missed payments on credit cards alongside simple communication blips and other revolving credit – for clients with recent blips on their credit record, as well as first-time landlords looking to finance standard properties.
Foundation director of marketing, Jeff Knight, commented: “As we have moved into 2020, our focus continues to be on helping intermediaries whelp their landlord clients secure the mortgages they need, and helping them have access to as wide a range of properties as possible.
“We have done this today via two methods, namely changing our ICR calculations and by upping our maximum loan sizes across all our range for those seeking both 65% and 75% LTV options. This is important as it keeps the rental income requirement down and perhaps opens up properties that a landlord borrower would not be able to ordinarily consider.
“Foundation’s focus is on marrying flexibility and accessibility with responsible lending, and given our increased appetite for BTL business this year, we believe these measures help advisers and their landlord clients to get where they want to be.”
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