Ask the Expert: Spectrum Independent Financial Advice

Steve Opie, Director of Finance, Spectrum Independent Financial Advice 

New rules that will affect buy-to-let mortgage applicants.  

If you have a portfolio of rental properties you will find it harder to get a buy-to-let mortgage approved after September 30. This is because guidelines issued by the Prudential Regulation Authority (PRA) to buy-to-let mortgage lenders will become mandatory.   

At the moment these regulations should only be applied to those who have four or more mortgaged properties. However this may change and there is nothing to stop lenders now from applying the guidelines to applicants with fewer properties.   

Going forward, when an application for a new mortgage is made, lenders will be obliged to scrutinise the whole portfolio to ensure that an additional financial commitment can be comfortably managed. While lenders may set slightly different thresholds, we expect this will mean that fewer applications will be approved. 

To support new applications lenders will most likely want to see most, if not all, of the following:  

• Details of total mortgage borrowings  
• Income and expenditure 
• Copies of tenancy agreements 
• Bank statements 
• Submitted tax returns 
• SA302 (summary of income reported to HMRC – available on request from HMRC) 
• Bank statements 
• A business plan including cash flow predications 

All this increased paperwork will inevitably mean that applications take longer to process but if your books are in good order before you start, it will help you get ahead.    

You may also want to seek advice from an independent financial advisor who specialises in mortgages.  They will help you to find a mortgage deal that best suits your financial position and support you through the application process.  

To get in touch with Steve please call 0800 195 1066 or email him at steve@specifa.co.uk