The Buy to Let market has been hit hard this week as two of the major players make significant changes to their criteria.
BM Solutions (part of the Lloyds Banking Group) have withdrawn their House to House product. What does this mean? Well, the majority of investment mortgages, or better known as Buy to Lets work on a required rental calculation. Most use a 125% rule. Therefore the rental payment must be 125% of the monthly mortgage payment, usually based on the actual interest pay rate. If the rental payment was short in calculation, then the loan offered would be reduced to fit.
The Mortgage Works (part of Nationwide) have also made a number of changes to their Buy to Let offerings. These include the withdrawal of their regulated Buy to Let offering. A regulated Buy to Let is where a sizeable portion of the property is rented out to a family member. They have also withdrawn the option for clients to buy a property from a relative.