Barclays will soon allow landlords to use their personal income to plug any shortfalls where the rental cover calculation is not met.
To do this it will introduce affordability assessments on all buy-to-let applications from 27 July. It will launch a new affordability calculator so brokers can check if their clients meet its criteria.
All new applicants will be stressed against the lender’s current rental cover calculation of 125 per cent at its current stress rate of 5.79 per cent.
Where the rental cover calculation is not met and applicants have a sufficient surplus of disposable income, the lender will allow the customer to use this to cover the shortfall.
Barclays will withdraw its current buy-to-let range at 5pm on 24 July. If any cases have not completed by this time they will have to be resubmitted and the lender will carry out an affordability assessment.
A Barclays spokesman says: ”We have changed our lending criteria so we now conduct a personal affordability check for all applications. This not only enables us to be confident as a lender that we are lending responsibly but also allows prospective buy-to-let customers to use personal income to cover any shortfalls where our 125 per cent rental cover calculation is not met”.
Chadney Bulgin mortgage partner Jonathan Clark says: “These changes are further evidence of Woolwich’s commitment to the buy-to-let market. The ability to produce an AIP certificate brings them in line with their competitors and having access to a thorough affordability calculator that will potentially allow surplus earned income to cover a rental income shortfall will be welcomed by brokers.”