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Accord reduces BTL affordability calculations

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  • 05/04/2023
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Accord reduces BTL affordability calculations
Accord Mortgages has lowered the interest coverage ratio (ICR) rates on its buy-to-let mortgages.

For landlords remortgaging on a like-for-like basis, the ICR is now six per cent, down from 6.5 per cent or the product rate plus one per cent, whichever is higher. This applies to products with fixed terms of five years or less.  

For longer product terms, the ICR is now 5.5 per cent down from 6.5 per cent, or the product rate plus one per cent, whichever is higher. 

For purchase or remortgage with capital raising, the ICR has dropped from 7.5 per cent to 6.5 per cent, or the product rate plus two per cent, whichever is higher. This applies to fixed terms of five years or less. 

For products with initial terms of longer than five years, the ICR will reduce from 6.5 per cent to 5.5 per cent or the product rate plus one per cent, whichever is higher. 

The ICR for basic rate taxpayers will remain at 125 per cent, and for higher rate taxpayers will continue to be 145 per cent. 

The changes apply to all new applications. 

Nicola Alvarez, senior manager for new propositions at Accord Mortgages, said: “As a buy-to-let lender, continually finding ways to help brokers and the landlords they serve is always at the forefront of our thinking. 

“We understand the vital role landlords play in providing the kind of private rented housing, which is in increasingly short supply, and are hoping these latest changes will provide much-needed support to them in the current challenging interest rate environment.” 

This change comes days after the lender announced it had reduced rates across its buy-to-let deals.

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