The Mortgage Work has outlined how it will handle portfolio lending ahead of the introduction of new underwriting standards from 30 September 2017.
TMW will define a portfolio landlord as a borrower with four or more distinct mortgaged buy-to let-rental properties.
The interest cover ratio on portfolio cases will be 145 per cent.
TMW will ask for a customer’s income on all cases at the decision in principle stage.
A property schedule will be requested for all portfolio landlord applications.
Additional questions will be asked at the DIP stage to identify portfolio landlords.
If the customer has or will have four or more mortgaged properties, there may be additional questions about the value, rental income and outstanding mortgage balances secured against the whole portfolio.
The lender is also setting up an online system that will allow brokers to fill in portfolio property details on mortgage applications.
These will be validated automatically and the results sent for assessment to the specialist portfolio underwriting team.
HMO ICRs will remain at 170 per cent, regardless of landlords’ tax status.
The lender will not change LTV limits, maximum loan size, minimum income criteria, stress rates or the number of properties accepted will remain the same.
TMW will continue to accept portfolios of all sizes, with no limit to the number of properties.
TMW managing director Paul Wootton says: “Following the confirmation of our commitment to supporting portfolio landlords and intermediary partners through the transition to the new PRA underwriting standard, we are now providing further detail on how we are going to address such cases.
“This is to give the clarity landlords and brokers need to help them with their planning at a time of ongoing change for the buy-to-let sector.”