OneSavings Bank simplifies interest coverage ratios

OneSavings Bank simplifies interest coverage ratios

OneSavings Bank is changing its interest coverage ratio (ICR) requirements for all buy-to-let loans through its trading brands Kent Reliance and InterBay Commercial.

The company said the changes "substantially simplify" ICR requirements and potentially increase the amount customers could borrow against their buy-to-let property.

Adrian Moloney, sales director at OneSavings Bank, said: "Not only will these changes simplify the buy-to-let loan process and improve understanding amongst our brokers and their clients, but this simplification could also mean the opportunity for landlords to borrow more should they need to."

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The simplified approach will mean there will be a 140 per cent ICR requirement for an individual with a standard buy-to-let property and a 160 per cent requirement for an individual with a specialist buy-to-let property.

For limited companies there will be a 125 per cent requirement for a standard buy-to-let property while this will be 145 per cent for specialist buy-to-let properties.

The definitions of standard and specialist property have not been changed.

Daniel Bailey, mortgage broker at Middleton Finance, said: "The 140 per cent, I would say, is pretty standard in the market at the moment.

"Brokers are having to spend more and more time on lenders' calculations and lenders are increasingly looking at this."