Barclays Break Cover - New BTL Criteria Due to New Tax Regim
Discussion
Sarnie said:
You won't be the only one, people just don't realise it yet............
If your existing lender allows you to do a product switch I assume it won't affect you, it's only if you remortgage or new purchase. I've choosen a lender this time which allows a product switch, not all do like platform home loans I'm with for one of mine. Coventry building society and virgin allow btl product switch. 
Casa1862 said:
If your existing lender allows you to do a product switch I assume it won't affect you, it's only if you remortgage or new purchase. I've choosen a lender this time which allows a product switch, not all do like platform home loans I'm with for one of mine. Coventry building society and virgin allow btl product switch.
It will affect you if your current lender allows product transfers but changes their assessment criteria.I have a client who bought two flats with TMW at 80% LTV. TMW have just withdrawn lending at 80% and increased the rental coverage to 145%.......hisrental and lTV no longer fit lending criteria. He doesn't have any other option other than reducing the balances accordingly or reverting to the SVR........
Sarnie said:
It will affect you if your current lender allows product transfers but changes their assessment criteria.
I have a client who bought two flats with TMW at 80% LTV. TMW have just withdrawn lending at 80% and increased the rental coverage to 145%.......hisrental and lTV no longer fit lending criteria. He doesn't have any other option other than reducing the balances accordingly or reverting to the SVR........
TMW are going to force him off his current deal or will this only happen at the end of an agreed fixed/tracker term? Presumably you can just sit on an SVR until you either sell the house or find enough cash to reduce the amount you need to borrow?I have a client who bought two flats with TMW at 80% LTV. TMW have just withdrawn lending at 80% and increased the rental coverage to 145%.......hisrental and lTV no longer fit lending criteria. He doesn't have any other option other than reducing the balances accordingly or reverting to the SVR........
The only thing which will really calm the BTL market is when interest rates rise and give people back their decent savings account rates. Then most people will be perfectly happy to have their cash reserves sat in a bank account again.
Until that happens, which may be many more years yet, the BTL sector is still going to look very attractive to thouse with lumps of spare cash.
Mr Noble said:
TMW are going to force him off his current deal or will this only happen at the end of an agreed fixed/tracker term? Presumably you can just sit on an SVR until you either sell the house or find enough cash to reduce the amount you need to borrow?
They can't force him off his current deal, it's just that his current rate reverts from the current 2.99% to their SVR of 4.99% at the end of June and they have no 80% LTV products for him to transfer to......his choices are to reduce the balance and transfer to a new product with TMW or elsewhere, or stick with it and revert to the 4.99% SVR.......Sarnie said:
It will affect you if your current lender allows product transfers but changes their assessment criteria.
I have a client who bought two flats with TMW at 80% LTV. TMW have just withdrawn lending at 80% and increased the rental coverage to 145%.......hisrental and lTV no longer fit lending criteria. He doesn't have any other option other than reducing the balances accordingly or reverting to the SVR........
I agree in this case that the lender no longer does 80% LTV, however a lot have borrowed at 75% LTV or less, those people would be OK? I thought the whole point of a product swap is that a new application does not need to be done, my understanding is that as long as you take "no advice"and ask for "execution only" the process requires very little checking, I've always done it on line or by phone, process took 10 minutes. I have a client who bought two flats with TMW at 80% LTV. TMW have just withdrawn lending at 80% and increased the rental coverage to 145%.......hisrental and lTV no longer fit lending criteria. He doesn't have any other option other than reducing the balances accordingly or reverting to the SVR........
Casa1862 said:
I agree in this case that the lender no longer does 80% LTV, however a lot have borrowed at 75% LTV or less, those people would be OK? I thought the whole point of a product swap is that a new application does not need to be done, my understanding is that as long as you take "no advice"and ask for "execution only" the process requires very little checking, I've always done it on line or by phone, process took 10 minutes.
What you've always done in the past won't apply to what you need to do in the future if the lender moves their goalposts like TMW....With regards to this;
"I agree in this case that the lender no longer does 80% LTV, however a lot have borrowed at 75% LTV or less, those people would be OK"
They may be ok on LTV but if the rental is not meeting the new 145% stress rate then there will be issues that ultimately will mean balance reductions until the lending fits the new stress rate......
I've been considering getting a BTL 100k with a rental of 550pm long term sitting tenant in a good area. I'd been wondering about buying outright vs mortgage and it's starting to sound like outright is the better way even as a higher rate TP as the criteria etc could catch out further down the road...?
Sarnie said:
What you've always done in the past won't apply to what you need to do in the future if the lender moves their goalposts like TMW....
With regards to this;
"I agree in this case that the lender no longer does 80% LTV, however a lot have borrowed at 75% LTV or less, those people would be OK"
They may be ok on LTV but if the rental is not meeting the new 145% stress rate then there will be issues that ultimately will mean balance reductions until the lending fits the new stress rate......
If that's the case and they are stress testing existing customers at the new rate then makes retention products a little pointless, will they send a surveyor to check the current rental valuation? it even says on the tmw website that it can be done in minutes and no mention of re assessment on a product switch. Are you sure this new stress applies to existing customers wanting to switch?With regards to this;
"I agree in this case that the lender no longer does 80% LTV, however a lot have borrowed at 75% LTV or less, those people would be OK"
They may be ok on LTV but if the rental is not meeting the new 145% stress rate then there will be issues that ultimately will mean balance reductions until the lending fits the new stress rate......
http://www.themortgageworks.co.uk/oms
We are now in the daft situation where lenders will be telling us we 'can't afford' to remortgage to one of their products at, for example 2.99 (with all other lenders saying the same too), but they will be perfectly happy for you to stick with your current mortgage but revert to 4.99 SVR. Many people with highish LTV will just have to suck it up as there will be nowhere to go.
What would be carnage is if they decided to reassess at the end of your fixed/discounted period, many would have literally nowhere to go and would have to sell quickly.
What would be carnage is if they decided to reassess at the end of your fixed/discounted period, many would have literally nowhere to go and would have to sell quickly.
ITP said:
We are now in the daft situation where lenders will be telling us we 'can't afford' to remortgage to one of their products at, for example 2.99 (with all other lenders saying the same too), but they will be perfectly happy for you to stick with your current mortgage but revert to 4.99 SVR. Many people with highish LTV will just have to suck it up as there will be nowhere to go.
Which I beleive was exactly what happened initially in the residential mortgage market when the checks became more comprehensive.Sarnie said:
It seems that Barclay's have blinked first and altered their BTL assessment in light of the new tax regime......rental stress rate put up to 135% from 125%.......
Seems Barclays are taking this further...........rental coverage upped again from 1355 to 145%...."From 26 May we are making an adjustment to the minimum rental cover required for all new BTL applications from 135% to 145%.
We will continue to carry out a full income and expenditure assessment where clients can continue to use personal disposable income (including bonuses) to make up any shortfall in rental cover.
These changes are being introduced as a result of the reduction in landlord tax relief available from next April (phased in over four tax years). As a responsible lender we want to ensure that your clients can afford their repayments plus, other costs associated with the property where the borrower is responsible for payment such as, council tax and management / letting fees."
Edited by Sarnie on Thursday 19th May 11:35
I think I might be remortgaging a buy to let over the weekend up it to the max I can (dump the proceeds into an ISA).
Worth doing before they all move the goal posts.
If the 145% rule is required for all & then reassessed once the deal moves to SVR that's a game changer for a huge number of people. Potentially you'd have to sell the residential house to carry on or need to dump it quickly.
As such are there any lifetime deals? I guess a variable rate tracker would meet that criteria.
Worth doing before they all move the goal posts.
If the 145% rule is required for all & then reassessed once the deal moves to SVR that's a game changer for a huge number of people. Potentially you'd have to sell the residential house to carry on or need to dump it quickly.
As such are there any lifetime deals? I guess a variable rate tracker would meet that criteria.
Seems the market is reacting now, goal posts are being moved........Newcastle BS this morning;
"Following a review of the market, we can confirm some changes to our Buy to Let Mortgage Lending Policy.
The key changes take effect immediately and are described briefly below, and in the lending criteria section of our website.
• Buy to Let – Rental Coverage Ratio
This has now been increased to 145% on a reference rate of 5.5%. Previously this was 125% on a reference rate of 5%.
• Buy to Let – Maximum number of investment properties
This has now been reduced from 5 to 3. For the avoidance of doubt this figure only includes mortgaged BTL properties, those that are held as mortgage free would not be included."
"Following a review of the market, we can confirm some changes to our Buy to Let Mortgage Lending Policy.
The key changes take effect immediately and are described briefly below, and in the lending criteria section of our website.
• Buy to Let – Rental Coverage Ratio
This has now been increased to 145% on a reference rate of 5.5%. Previously this was 125% on a reference rate of 5%.
• Buy to Let – Maximum number of investment properties
This has now been reduced from 5 to 3. For the avoidance of doubt this figure only includes mortgaged BTL properties, those that are held as mortgage free would not be included."
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