Buy to Let Lending Criteria for rental coverage
Lending criteria
Rental coverage
Please use the rental calculator to check the rental coverage you need before you submit an application. Our Interest coverage ratio (ICR) is calculated based on property tenure, mortgage type and term. The rental figure is based on an unfurnished property and must be confirmed by the valuer.
To calculate the maximum borrowing available, we take the lower of the rent received or how much a valuer thinks the property will rent for.
We apply different ICRs dependant on circumstances, these are as follows:
| Purchase and Remortgage, Capital raising | Straight switch remortgage | ||||
|---|---|---|---|---|---|
| Applicant Tax rate | Product term | ICR | ICR Rate | ICR | ICR Rate |
| Basic rate* | < 5 years | 125% | The higher of 5.5% or product rate +2.0% | 125% | The higher of 5.5% or product rate +1.0% |
| Basic rate* | >= 5 years | 125% | The higher of 4.75% or product rate +1.0% | 125% | The higher of 4.75% or product rate +1.0% |
| Higher rate** | < 5 years | 145% | The higher of 5.5% or product rate +2.0% | 145% | The higher of 5.5% or product rate +1.0% |
| Higher rate** | >= 5 years | 145% | The higher of 4.75% or product rate +1.0% | 145% | The higher of 4.75% or product rate +1.0% |
*Basic rate taxpayer: Where all applicants on the application have a taxable income of no more than £50,271 in England and Wales/£43,663 in Scotland AND are basic rate taxpayers or pay 0% tax after completion of the application.
**Higher Rate Taxpayer: Applications where at least 1 applicant has a taxable income greater than £50,271 in England and Wales/£43,663 in Scotland and/or those which are higher rate taxpayers or additional rate taxpayers after completion of the application.
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