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Furness scraps ICR for buy to let assessment and launches range

  • 22/03/2017
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Furness scraps ICR for buy to let assessment and launches range
Furness Building Society has confirmed plans to assess all buy-to-let loans on affordability and scrapped the Interest Coverage Ratio calculation for all new cases.

The lender has also launched an online buy-to-let broker calculator to help advisers assess buy-to-let case viability.

The range includes both discount and fixed rate products.

The two-year discounted variable rate products include a 1.80% rate, up to 60% LTV and a 1.99% rate up to 75% LTV, both with a fee of £1,495.

The three-year fixed rate products include a 2.05% rate up to 60% LTV and a 2.85% rate up to 75% LTV, but both products carry a fee of £2,145.

The mutual offers consumer and unregulated buy-to-let mortgages.

Barry Fitzsimmons, head of intermediary distribution said: “We are absolutely committed to supporting our intermediary partners and we recognise the need for competitive fixed rate products in the buy-to-let sector.

Fitzsimmons said the gross anticipated rent for any deal should still be at least 125% of the interest charges at the initial pay rate.

He added: “The Society will use overall affordability to assess each case and we firmly believe these changes, including the introduction of the calculator, show our commitment to lending in this segment of the market”.

In September the Prudential Regulation Authority (PRA) issued its supervisory statement on underwriting standards for the buy-to-let sector.

The rules set out several requirements, which had to be implemented by 1 January 2017 (with some in September this year) including the interest coverage ratio clause which stipulated that lenders would be allowed to use a variety of information to set the minimum threshold at their own discretion.

Capital gains tax does not need to be included in the assessment of affordability.

9 things you should know about the PRA’s buy-to-let underwriting rules

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