We're reducing our minimum Interest Cover Ratio for lower rate tax payers

Since confirmation of the PRA guidance on BTL Underwriting Standards, we've been developing the capability to segment our minimum Interest Cover Ratio (ICR) requirements for higher and lower rate tax payers.

So, from Wednesday 17 May 2017, we're reducing the minimum ICR from 145% to 125%, for zero and basic rate tax payers.

What else do I need to know?

125% can be used for landlords who, on completion of the new TMW mortgage:

  • Can evidence that they are currently a lower rate tax payer (gross income of £45k or less in England/Wales or £43k or less in Scotland).
  • The maximum portfolio size upon completion of the new application is set at three properties (all rental properties are included in this total, including any TMW applications in progress and any unencumbered properties). There is no change to policy for landlords who meet the higher 145% ICR.

NB: For joint applications, each applicant will need to meet this criteria, i.e. own three or less rental properties each.

There will be no impact for existing TMW customers who are seeking a product switch or transfer of equity, providing no additional borrowing is involved.

Which income proofs do I need to send?

To help validate the landlord's existing tax status, we will request the following:

Landlord Type Income Type Proof
Experienced Landlord Self Employed Tax Calculation & Tax Year Overview
First Time Landlord Self Employed
Employed/Retired Latest Payslip
No Taxable Income 3 Months Bank Statement

For applications with a 145% ICR or higher:

  • Proof of income isn’t usually required but if we do need to see proof of income, we'll ask you to send this to us.