Landlords are battling an affordability crunch as banks clamp down on borrowing over fears the cost of living crisis will push up rental arrears.
Lenders have increased stress-testing on buy-to-let mortgages, dramatically reducing the amount that landlords can borrow. Investors trying to remortgage may find they are forced to pay down their loans, experts have warned.
Lenders stress-test landlords using a “rental cover rate”. This is rental income as a percentage of an investor’s repayments. Santander has tightened its test on a five-year fixed-rate buy-to-let mortgage, increasing the necessary rental income in proportion to the loan.
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