Buy to let
No fuss, common-sense approach to lending.
Criteria for buying a rental property
If your client is looking to buy a property to use as a rental, there are a few things that need to be considered. Your client:
should be 21 years old or older
should not own more than 3 mortgaged buy to lets
can be a first time buyer or landlord
What you need to know
- there is no minimum income requirement
- we consider non-regulated buy to let applications on an advised basis
- no owner-occupier requirements
- non-EEA applicants considered
- properties must have an energy performance rating of E or above
- we accept applications from applicants who do not currently own and live in their own home
- the maximum LTV for a buy to let mortgage is 75%
- the minimum property value and purchase price is £50,000
- the minimum loan size is £25,000
- for some cases, we'll need more documents, we'll ask if we need them
The maximum total borrowing must not exceed £2m including our lending. This should include any mortgages the applicant/s is included on jointly. This can exclude any residential and/or holiday let mortgages.
Our loan to value criteria
| Loan to value | Minimum loan size | Maximum loan size | Interest only application |
|---|---|---|---|
| 60% | £25,000 | £1,000,000 | Yes |
| 75% | £25,000 | £750,000 | Yes |
Calculate how much your client can borrow
Find out how much your client could borrow for their Buy to Let mortgage using our calculator.
How is affordability calculated?
- • For purchases before January 2017, we require 125% income cover ratio (ICR).
• For purchases after January 2017, we require 145% income cover ratio (ICR).
We require the below as rental coverage:
- For 2 & 3-year fixed and discount products: Product Rate +2%
- For 5-year fixed rate products: Product Rate +0%
- For 5-year discount products: Product Rate +2%
Important: A minimum rate of 5.5% will always apply.
Based on a 5-year fixed rate product with a product rate of 5% for a property purchased before 2017
Stress rate: 5.5%
Monthly rental is calculated as follows:
- If your client has a property they rent for £1000 per month.
- Property rental / ICR / stress rate x 12 = maximum loan size
- £1000 / 125% / 5.5% x 12 = £174,545
This means the maximum borrowing would be £174,545
We accept consumer buy to let applications.
Note: Principality Building Society doesn’t currently lend for regulated buy to let mortgage loans but continues to service existing accounts.
Lettings must be Assured Shorthold Tenancy Agreements (ASTA, England) or Written Statement of Standard Occupation Contract (WSSOC, Wales) with no more than 12 months remaining at application.
Where a tenant (England) or contract holder (Wales) is continuing tenancy beyond the initial ASTA/WSSOC, a new rolling contract is acceptable.
This will be verified by the solicitor in line with our mortgage conditions.
All borrowers must be named on the ASTA or WSSOC.
We won’t lend on third party or sub lettings; this includes company lets and local authorities.
View our Buy to Let and Holiday Let mortgages
Want to find out more, view our Buy to Let and Holiday Let ranges.