Coventry for Intermediaries has introduced a new tiered buy-to-let interest coverage ratio (ICR) system, which it hopes will make it easier for people to raise the funds required to invest in the private rented sector.
Previously the lender had an ICR of 140% across the board, but it will now only remain at that level for higher rate taxpayers, or those earning more than £40,000 a year, while the lender is reducing it to 125% for applicants who are non-tax payers or basic rate taxpayer, and whose total gross annual income is less than £40,000.
Coventry for Intermediaries is also dropping its requirements for minimum income, which was previously £25,000 or £30,000 for joint applications, as well as the need for a landlord to have been employed for at least 12 months.
Kevin Purvey, the lender’s director of intermediaries, said: “We’ve listened to and worked with intermediaries, and we think that a tiered ICR calculation – as part of our overall assessment – is the best way to adapt to the changing market.”
The lender, which will continue to implement a stress rate of 5.5%, or 5% for fixed rate products of five years or longer, recently launched a selection of buy-to-let mortgages at 50% loan-to-value (LTV), with rates starting from 1.49% for a two-year fix.
Other products include a 2.59% five-year fix, with each deal subject to a £1,999 product fee.
“All of our products are application fee free and include a valuation of up to £700 for buy-to-let mortgages,” said Purvey.