Income criteria
In this section we cover:
Minimum income
There is no minimum personal income requirement, however, proof of personal income may be requested to support an application. This will be used with other information relating to the landlord and the property, to validate that the loan will be used for its intended purpose.
Non-portfolio applications
Further underwriting will be carried out and additional proofs to support sustainability may be required, for example one or more of the following evidence:
- 3 months' bank statements
- Personal savings to support 6 months’ rental income
- Additional household income*
- Available household funds to act as a sinking fund.*
* Household income/sinking fund will only be considered where the third party is a spouse/partner of the applicant and they hold a joint residential mortgage with them.
The application may be declined if we consider the exposure to be too high. For example, where they have a large residential mortgage solely owned or a large amount of unsecured debt not consistent with the household income.
Stress rates
To check affordability, we apply the following stress rates:
| Application type |
Trackers and variables |
Fixed for 1 or 2 years | Fixed for 5 or 10 years |
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|---|---|---|---|---|---|---|---|
| Purchase, Remortgage (with capital raising) and Further Advance |
Like for Like Remortgage (excluding Let to Buy) |
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| Stress Rate | Higher of pay rate +2% or 5.50% |
Higher of pay rate or 4.50% |
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* Please refer to our ICR section for more information on the ICR applicable on your application.
Pay rates
Check our product finder to find out what the pay rate is for your product.
Further advances
Individual loan elements will continue to be stressed separately in line with the above. However, the Stress Rate applied to existing lending will also be set to a minimum of the Stress Rate applicable to the new borrowing. Please download our further advance calculator for support calculating potential further borrowing.
Interest Cover Ratio (ICR)
To reflect the different taxable income levels of applicants, we have a range of ICRs that are applicable dependant on the customer and/or application. The gross rental income, confirmed by the valuer, must cover the monthly mortgage interest payment by at least:
Limited Company HMO |
Company Buy to Let |
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|---|---|---|---|
When calculating the maximum borrowing, this will include any product fees you want to add to the loan. If the product fee is being added to the loan, this can exceed the maximum LTV. But it can't exceed the maximum loan amount.
130% ICR applies to all Limited Company applications (except Houses in Multiple Occupation) and those in personal names where the following criteria is met:
- Applicants declare themselves to be Lower rate taxpayers and;
- Declaring their gross annual income is less than £50,271 per applicant, upon completion of the mortgage (less than £43,662 gross income in Scotland).
- Personal applicants can have no more than 3 rental properties (with or without a mortgage), including any TMW applications in progress.
Of the existing buy to let income input at Decision in principle stage, we'll take into account the following in our assessment of an applicant’s overall income:
- 75% of all rental income, which includes existing and proposed BTLs with The Mortgage Works (TMW).
- 100% of all other sources of income.
Additional ICR information
In order to ensure the correct ICR is applied to the application, you need to key 100% of all existing BTL income.
For purchase and Let to Buy applications we'll add 75% of the new property's proposed gross rental income to the applicants’ annual income.
For joint applications, we'll add half of the 75% proposed gross rental income to each applicants’ annual income.
In order to validate that all applicants are lower rate tax payers and income meets the policy above, proof of income will be required in the form of a latest SA302 (the only acceptable SA302 should cover the years 2022/23) or tax calculation and the accompanying tax year overview (dated within 18 months of the DIP). See table below.
Any applicant that has recently left employment, retired or started self-employment will need to be treated as a higher rate tax payer.
View the portfolio landlords rental calculations and maximum LTVs on our dedicated Portfolio landlord criteria page.
Income proofs
Income proofs will be required for landlords using the 130% ICR and may be requested for applications with a 165% ICR or higher (e.g. if there are high levels of unsecured debt, Nationwide Group BTL exposure over £1million).
Income included in assessment:
- Gross earned income (employed/ self employed)
- Pension income
- Total gross rental income
Acceptable proof of income:
| Landlord Type | Income type | Proof |
|---|---|---|
| Experienced Landlord | Self employed | Tax calculation & Tax Year Overview* |
| Employed/retired | ||
| First Time Landlord | Self employed | |
| Employed/retired | Latest payslip/pension statement | |
| No taxable income | 3 months bank statement |
*if an SA302 isn't available, an accountant's reference can be accepted. Please contact us with the accountant's details so we can request this.