TMW relaxes ICR to 125% for low rate taxpayers


The Mortgage Works has relaxed its interest cover ratio for buy-to-let lending to lower rate taxpayers from 145 per cent to 125 per cent.

The cut will apply to those paying no tax and basic rate tax on income.

When the Prudential Regulation Authority brought in tougher underwriting standards for buy-to-let at the beginning of the year, TMW moved its minimum ICR to 145 per cent and reduced the maximum LTV to 75 per cent.

But now the lender says it has “developed the capability to separate out ICRs for higher and lower rate tax payers”.

TMW managing director of specialist lending Paul Wootton says: “We are taking steps to make sure that those buy-to-let borrowers who are paying tax at the lower rate see that reflected with appropriate measures of affordability.

“TMW, as part of Nationwide, already robustly assesses the affordability of its buy-to-let mortgages against stress rates that are higher than the borrower’s existing rate, and wanted to take a more flexible approach for those borrowers unaffected by the incoming tax relief changes.”

Landlords’ maximum portfolio size on completion of new applications is three properties.

There is no change to policy for landlords who meet the higher 145 per cent ICR.