Are lenders adopting a new approach to the buy to let mortgage?

For all landlords, the buy to let mortgage sector has proved to be tricky over the last couple of years.

To balance the new laws that were introduced around tax relief and stamp duty, lenders have been competing hotly with each other to offer attractive rates and loan criteria.

One lender is adopting a unique approach concerning the stance they take when it comes to joint borrowers and ICRs.


If you are borrowing jointly with someone else – a family member or business partner, for instance - the tax rate you individually pay can impact the ICR calculation. If you pay a higher tax rate than the other person (or persons), then that is the rate lenders will use to calculate the ICR. However, Magellan Homeloans averages our the tax rates you all pay to make the ICR calculation. This softer approach is designed to help with affordability and to maximise the potential in each applicant’s share of the property.

This innovation may be suitable for you but it could be, depending on your circumstances, that another product is a better fit. To found out what your best buy to let mortgage options are, contact Deal Direct.   

Please note that Deal Direct are regulated to offer independent mortgage advice; however, we are not regulated to offer general financial advice. If you want to discuss the suitability of a property as an investment, you will need to contact an independent financial adviser.

In addition, buy to let mortgage applications from:

  • applicants whose intention is to benefit from house price growth
  • applicants whose intention is to benefit from rental income
  • applicants who are letting to buy

will be treated as a normal buy to let and not as a consumer buy to let. In addition, their subsequent remortgage applications will also be treated in the same manner.

For professional advice on all mortgage types, call 0800 048 8828.

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Article published: Friday, December 28, 2018
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