Platform has changed its affordability requirements for remortgage cases to help landlords hit by tighter market regulations.
The Co-op Bank’s intermediary arm will assess eligible buy-to-let remortgage applications using a minimum of 128 per cent rental cover – the amount of monthly rent required to cover mortgage repayments.
Applications will be stress tested to ensure the borrower could cope with an interest rate increase of 5.5 per cent.
The move is aimed at helping so-called buy-to-let mortgage prisoners – people who had a mortgage before new Prudential Regulation Authority (PRA) affordability guidelines came into effect in January 2017.
The PRA changes led most lenders to raise their rental income requirements from 125 per cent to 145 per cent of mortgage interest.
Platform said it would support landlords looking for a pound for pound remortgage without any additional capital raising.
Buy-to-let applications that do not meet these criteria will continue to be assessed using a minimum of 145 per cent rental cover at a notional interest rate of 5.5 per cent.
Paul Norcott, head of mortgages and insurance at the Co-operative Bank and Platform, said: "We have been closely following developments in the buy-to-let market since the new PRA guidelines were published, and we know that buy-to-let remortgaging has been more difficult for some landlords since the market adopted those guidelines.
“These changes to our buy-to-let criteria demonstrate that, whilst we remain extremely committed to responsible lending, we also want to take a common-sense approach that supports landlords looking for a straightforward like-for-like remortgage."
Andrew Montlake, director at London-based Coreco Group, said: “Part of the problem with all these changes in the buy-to-let market is there could be a lot of people stuck when it comes to remortgaging because they can’t get the rental yields to fit the new calculations.
“It seems like a sensible move from the Co-op Bank to reduce the rates for those looking for a straightforward remortgage.”
simon.allin@ft.com
