x
By using this website, you agree to our use of cookies to enhance your experience.

With just two days remaining before the Mortgage Market Review kicks in, here is a summary of how it will affect the private rented sector.

The good news - for landlord borrowers, anyway - is that MMR has a much less significant effect on the buy to let sector than on the pure residential sales side.

However, some lenders have used the more rigorous approach required for owner occupier borrowers to extend restrictions across investment buyers too.

So in assessing an investor's minimum income (which most but not all mortgage firms require for buy to let borrowing), a lender will require evidence of wages and copies of recent bank statements.

Of critical importance to landlords who are self-employed, lenders will want to see an SA302, which is the self-assessment tax calculation which can be obtained from HMRC.

It is believed that many lenders may also conduct interviews to ensure that, in the light of tougher MMR requirements, some owner occupiers do not try to obtain a buy to let mortgage for a home they actually intend to live in.

This may not apply to many cases but if a lender is suspicious that a borrower can stump up the typical BTL deposit of 25 per cent or more, but may have less reliable income to be considered a good mortgage debt', fraudulent borrowings may occur.

BM Solutions, the buy-to-let division of Lloyds Banking Group, recently reversed its policy of lending BTL to first-time buyers a month after introducing it, fearing owner occupier buyers were avoiding stricter affordability criteria by applying for investor loans instead.

Therefore genuine investment buyers may be expected to undergo lengthier processes than they are used to.

LAT will be keeping tabs on how MMR affects landlord borrowers in the coming months.

Comments

  • icon

    Since when was BTL easier post credit crunch

    • 24 April 2014 09:26 AM
  • icon

    Good luck with getting a SA302 from HMRC.

    • 24 April 2014 08:51 AM
  • icon

    Industry Observer: Although everything you say is correct, it is the historically easier lending criteria that has attracted people to use BTL instead of Residential mortgage, generally when they cannot get a suitable residential mortgage or for second homes etc.

    • 24 April 2014 07:49 AM
  • icon

    "....some owner occupiers do not try to obtain a buy to let mortgage for a home they actually intend to live in."
    I know I am being thick here, but given that interest rates are usually higher, deposits bigger and term shorter than an owner occupier mortgage, why would any borrower want to take out a BTL loan for a property they intend to occuppy instead of renting out

    Are the MMR rules are that much tougher on owner occupiers than BTL borrowers

    • 24 April 2014 07:18 AM
MovePal MovePal MovePal