The minimum interest cover will reduce from 125% of a nominal rate of 5% to 105% of the pay rate of the product selected for all customers. For example, the new approach based on a mortgage of GBP200,000 on Woolwich’s 5.49% two-year fixed rate would require a monthly rental income of GBP960.75, as opposed to GBP1,041.66 under the previous policy.
The new policy applies to all customers, whether borrowing as private individuals, special purpose vehicle limited companies or limited liability partnerships.
Andy Gray, head of mortgages for Woolwich, said: We know that the demand for rented property is very strong in many areas as high property prices are forcing potential home buyers out of the market and into the rented sector. But despite continuing high prices, and forecasts of a slowdown in house price inflation, there is no actual expectation in the market of price falls, therefore the buy to let market still remains very popular as a long-term investment strategy for many people.
