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TMW reveals portfolio landlord criteria including ICR and LTV

  • 21/06/2017
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TMW reveals portfolio landlord criteria including ICR and LTV
The Mortgage Works (TMW) has outlined its portfolio lending criteria ahead of the changes being applied at the end of September by the Prudential Regulation Authority (PRA).

The lender, which is part of Nationwide Building Society, said that in line with guidance set out by the (PRA), it will define a portfolio landlord as a borrower with four or more distinct mortgaged buy to let rental properties.

It revealed that for portfolio cases, the Interest Cover Ratio (ICR) will be 145%, with Houses of Multiple Occupancy (HMOs) remaining at 170%, regardless of a landlord’s tax status.

There will be no changes to loan to value (LTV) limits, maximum loan size or minimum income criteria, while stress rates and the number of properties accepted will remain the same.

The lender will continue to accept portfolios of all sizes, with no limit to the number of properties.

Income will be requested on all cases at the decision in principle (DIP) stage. It said that proofs will not be asked for in all cases, but where they are required they will be requested by the underwriter at application.


Property schedule

TMW noted to brokers that a property schedule will be requested for all portfolio landlord applications.

Additional questions will be asked at the DIP stage to identify portfolio landlords, these will include the number of properties in a customer’s portfolio on completion of the current mortgage application.

If the customer has or will have four or more mortgaged properties, there may be additional questions about the value, rental income and outstanding mortgage balances secured against the whole portfolio.


Proportionate requirements

“Any additional information required on submission of the application will be proportionate to its complexity and in many cases will be the same as the information requested at present,” the lender said.

“For those that are less complex, a customer will need to provide information including income details, bank statements and a schedule of properties.

“More complex cases may require further information such as a business plan, including how long the properties have been owned, as well as the landlord’s current approach and future plans of portfolio management,” it added.

Brokers called for lenders to reveal their plans and criteria for the portfolio changes in the summer to allow them and their clients to prepare. TMW is one of the first lenders to do so.

TMW managing director Paul Wootton said: “Following the confirmation of our commitment to supporting portfolio landlords and intermediary partners through the transition to the new PRA underwriting standard, we are now providing further detail on how we are going to address such cases.

“This is to give the clarity landlords and brokers need to help them with their planning at a time of ongoing change for the buy to let sector.”

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