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Vida Homeloans revamps buy-to-let products

by: Carmen Reichman
  • 10/02/2017
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Vida Homeloans revamps buy-to-let products
Buy-to-let lender Vida Homeloans has introduced new rental calculations and top-ups for landlords in response to the stricter underwriting regime introduced by the Prudential Regulatory Authority in January.

For basic rate tax payers and limited companies, the lender’s new rental cover is 125%, however borrowers can lower the threshold to 115% with top-ups from their surplus income.

Similarly, higher rate tax payers will be able to lower the 140% rate of rental income required to 120%.

For pound for pound remortgages the lender has said it will use a notional rate of 5%, while a minimum rate of 5.5% will apply to rental calculations.

Vida said the criteria changes were in response to the PRA’s underwriting rules, which mandate a minimum borrower interest rate of 5.5% during the first five years of the buy-to-let mortgage.

The regulator also told lenders to take into account borrower’s costs including tax liabilities, verified personal income and possible future interest rate increases when assessing landlord affordability.

Tax, in particular, is going to increase for some landlords after the government introduces its cuts to landlord tax relief in April.

Meanwhile the government has published a white paper calling on lenders to support longer-term lets on new builds.

Vida already offers three-year assured shorthold tenancies (ASTs) on student and corporate lets and said it will continue to review its product range to ensure it meets the needs of underserved customers across the UK.

Vida Homeloans’ director of mortgage sales Louisa Sedgwick (pictured) said: “Vida Homeloans prides itself on being a modern mortgage lender – committed to helping borrowers from a range of backgrounds with their specialist needs. Our buy-to-let proposition is designed to give flexibility to landlords and demonstrates our appetite to advance mortgages to landlords who want to offer longer tenancies.”

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