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 |
How is affordability calculated?
- If the application is a £4£ re-mortgage on a property purchased on a BTL basis before January 2017, we will require 125% @ 5.50% as rental coverage.
- If the application is a £4£ re-mortgage on a property purchased on a BTL basis after January 2017, we will require 145% @ 5.50% as rental coverage.
- If the application is a re-mortgage with additional borrowing on a property purchased on a BTL basis, we will require 145% @ 5.50% as rental coverage.
Important: A minimum stress rate of 5.5% will always apply.
We will apply a stress rate of the product interest rate + 2%.
For example:
• £1500 rental income
• Based on a 2-year discount rate product with an interest rate of 7%
• Stress rate: 9%
• Maximum borrowing: £137,931
For more details visit our mortgage lending criteria.
We will apply a stress rate based on the product interest rate selected.
For example:
• £1500 rental income
• Based on a 5-year fixed rate product with an interest rate of 6%
• Stress rate: 6%
• Maximum borrowing: £206,896
For more details visit our mortgage lending criteria.
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.