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Lenders rethink BTL criteria

Rising interest rates are putting pressure on buy-to-let lenders to revise their lending criteria, says Moneyfacts.

The Mortgage Works has cut its maximum rental income ratio for BTL mortgages from 130 per cent to 125 per cent.

Earlier this year, the firm reduced its nominal rate for calculating income ratios from bank base rate plus 1.95 per cent to bank base rate plus 1.45 per cent.

Other lenders, including Scarborough Building Society, Bristol & West, Skipton Building Society, Platform Home Loans, BM Solutions and Paragon Mortgages, have also revised their policies.

Skipton previously used its standard variable rate to calculate the rental income req-uired but because of rate inc-reases, it now uses Libor.

BM Solutions has switched from using its standard variable rate to bank base rate plus 1.95 per cent.

Moneyfacts spokeswoman Jane Damson says: “Buy to let is a very different product than when it was introduced. Rates were lower than commercial borrowing but there was far more disparity between BTL rates and residential mortgage rates than there is now.

“At that time, lenders had no historical BTL lending book to help it assess risk but to date, BTL borrowing shows a far lower level of default than residential borrowing. Also, many BTL borrowers are experienced landlords with a proven track record.”


Aaron is first IFA firm to be banned for misselling

David M Aaron (Personal Fin-ancial Planners) has become the first IFA firm to be banned for misselling. It has been struck off by the FSA for widespread misselling of precipice bonds between January 1998 and June 2003. An FSA probe revealed that the company issued misleading ads and financial promotions which downplayed the risk of […]

Genesis adds affiliate status

Genesis has extended its franchise and license proposition to include affiliate status for smaller networks. As an affiliate, a smaller network can continue to manage a network of brokers, whilst receiving regulatory support from Genesis. The scheme is designed to appeal to small networks who do not have the financial resources or compliance to support […]

LIA-Sofa merger name is revealed

The closely guarded name for the planned merger between the LIA and Sofa is believed to be the Personal Finance Society. The name was due to be revealed to a small number of LIA members at a roadshow in Limavady in County Londonderry, Northern Ireland on Tuesday. Further roadshows will give LIA and Sofa members […]

Property seen as better prospect than equities

Property is still considered to be the best investment over the short and long term, despite fears of a collapse in the housing market, according to GMAC-RFC. Its research shows that 68 per cent of people think that property will yield the best return over 25 years compared with only 13 per cent who favour […]

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Considerations for overseas workers in Germany

With Germany’s strong economic growth leading the eurozone’s recovery, many UK businesses are keen to be part of the success story: recent data shows that there are currently more than 280,000* employees working for a UK-controlled company in the country.


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