Foundation Home Loans, the intermediary-only specialist lender, has today announced a series of criteria enhancements across its buy-to-let product range including changes to its interest coverage ratios (ICR) and maximum loan sizes.
From today, the lender has introduced a new ICR for basic-rate tax payers which reduces from 145% of rental income to 125%; affordability will still be calculated at pay rate for Foundation’s five-year fixed-rate products but at the lower ICR level of 125%, while the rental calculation for all other rates is 125% at 5.5%.
The lender’s ICR of 125% for limited company borrowers remains unchanged.
On an average £200k loan, the rental income required on Foundation’s five-year, 65% LTV fixed-rate product – currently priced at 3.09% – by a basic-rate, individual taxpayer is now approximately £100 less at 125% than it was at 145%.
Foundation has also announced it has increased maximum loan sizes across its entire product range (including HMOs, multi-unit blocks and short-term lets) for both 65% and 75% LTV.
From today – for both its F1 & F2 ranges – maximum loans have increased to £2 million for 65% LTV (large loans) from £1.5 million; to £1.5 million from £1m for other 65% LTV products; and to £1m from £750k for all 75% LTV products. Foundation’s maximum loan size for 80% LTV – which is only available in its F1 range – remains the same at £500k.
These criteria changes follow on from the introduction of greater flexibility to landlord borrowers, introduced last month such as, assessing missed payments on credit cards alongside simple communication blips and other revolving credit; and extending its F2 range of products – for clients with more recent blips on their credit record – to first-time landlords who are looking to finance standard properties.
Jeff Knight, Director of Marketing at Foundation Home Loans, said: “As we have moved into 2020, our focus continues to be on helping intermediaries whelp their landlord clients secure the mortgages they need, and helping them have access to as wide a range of properties as possible. We have done this today via two methods, namely changing our ICR calculations and by upping our maximum loan sizes across all our range for those seeking both 65% and 75% LTV options. This is important as it keeps the rental income requirement down and perhaps opens up properties that a landlord borrower would not be able to ordinarily consider. Foundation’s focus is on marrying flexibility and accessibility with responsible lending and, given our increased appetite for buy-to-let business this year, we believe these measures help advisers and their landlord clients to get where they want to be.”