BTL - Raising finance

I keep reporting on troubling times ahead for the BTL brigade and it is about time that there was some good news to tell you about. And here it is!

Coventry Building Society have now introduced a separate stress test for BTL mortgages for those who are basic rate tax payers. To recap the old stress test of 125% on rent to cover a mortgage at 5.5% was replaced with a steeper 145% coverage as lenders grappled with the enforced governmental changes earlier in the year. Nearly all of the lenders bar Birmingham Midshires took a cautious approach and increased the stress test. This meant that the maximum mortgage that you could get for a rental of £500 was reduced from £87,270 to £75,235.

The Coventry whose tag line is "TLC not plc" has broken ranks and is about to put in place a dual stress test which will mean that basic rate tax payers will be able to rely upon the old stress test of 125% at 5.5% and higher rate tax payers will be on the higher stress test calculated at 140% at 5.5%. Coventry tell me that the notional 5.5% rate can be reduced to 5% if you are fixing for 5 years.

In addition, the Coventry have done away with minimum income requirements and removed the requirement of minimum time in employment.

For a city with such a woeful football side their building society are certainly doing something right!

It is maybe too early to say but is there a softening of attitudes amongst the lenders?