After carrying out a pilot, the lender has decided to allow the applicant’s disposable income to be used to bolster the rental calculation.
Under the new approach, customers would be required to complete a full income and expenditure assessment. Landlords would need to disclose; net income, commitments and dependents, residential mortgages including permission to let properties and the total of all buy-to-let mortgages outstanding and rents received.
Disposable income cannot be used if the term of the mortgage takes the applicant into retirement.
Andy Gray (pictured), Barclays’ managing director of mortgages, said: “There are only a handful lenders that allow any shortfall in the rental income used to calculate affordability to be met by the applicant’s disposable income.
“Barclays’ new policy provides a greater opportunity for those planning for their financial future and choosing to invest in rental properties to help support their longer-term goals of, for example, paying for their childrens’ university fees or enhancing their lifestyle in retirement.”
This is the second major policy change inside a week which the lender has announced.
After applying a loan-to-income cap of four-and-a-half times income on applications over 80% loan-to-value (LTV) at the start of the year the lender extended this to cover all mortgages last week.