Buy to Let Criteria
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Affordability
Interest coverage rate (ICR) test will apply on all cases on an interest only basis. The interest rate used to calculate the ICR test will be:
- 5 or more years fixed rate products: the initial rate.
- Tracker and 2 year fixed rates products: A nominal rate (currently 5.5%) or the initial rate + 2%, whichever is higher.
ICR
| Tax rate | Individuals | Limited Companies / LLP | HMO / Multi-unit Blocks | New Build & Flats above commercial |
| Basic rate tax payer | 125% | 125% | 140% | 125% |
| Higher rate tax payer | 140% | 125% | 140% | 140% |
Proof of basic rate tax status - all applicants
Where all applicants are declared as basic rate tax status during application, proof of basic rate tax status will be required. Where the ICR meets 140%, we will assess the cases as such and will not require proof of tax status
Acceptable proof is tax code status letter/payslip/p60/tax calculation plus tax year overview. Other items may be acceptable on a case by case basis.