The new calculation works on the anticipated rental income being equal to at least 125 per cent of the monthly mortgage payment on an interest only basis, calculated at the Bank of England Base Rate plus 1 per cent.
It is aimed at the more professional landlord who has a number of btl properties which they manage on a self-funding basis.
As an alternative, UCB Home Loans will continue to offer its existing calculation, which allows the customer to use a combination of their earned income as well as the anticipated rental income.
The move has been designed to allow the customer to choose which calculation best suits their individual needs. This forms part of UCB Home Loans’ expansion plans for the btl market.
Managing director Keith Astill says: “We are doing this as a result of increasing demand from brokers to create a system which caters for the differing needs of investors. Both calculations deliver a responsible approach to lending, with the new self-funding option being more suitable for borrowers with larger property portfolios, or maybe those who are retired.