From the 30 September 2017 the PRA regulations will introduce new mortgage changes for Buy to Let Portfolio landlords. This will mean changes in the way they are underwritten by lenders. Here is a brief rundown of how these changes are expected to be implemented and how it might affect you.
What is a Buy to Let Portfolio Landlord?
Anyone with 4 or more Buy to Let mortgaged rental properties, excluding those abroad but including any applications that are already in the pipeline. It will be up to lenders to determine how to verify these criteria.
How will I be affected?
The main aim is to make sure that people are not over stretching themselves. So, in basic terms this may mean that from September, if you’re looking at a new Buy to Let property to add to your portfolio, a lot more information may be required. A lender will now look at a borrower’s complete buy to let portfolio, experience, cash flow and tax liabilities when deciding on whether to lend. They may also look at whether adding another property will be of benefit.
What does this all mean for me?
In basic terms, it will mean a lot more hoops to jump through. Especially in the way of paperwork. Lenders could ask to see cash flow forecasts, business plans and portfolio spreadsheets, together with the existing requirements of SA302’s, bank statements, tax returns etc.
Is there anything I can do to get ready?
If you have been considering another buy to let purchase to add to an existing portfolio, you may want to plough ahead sooner rather than later as it will be more complex from 1st October 2017. If this is not a possibility then, be prepared. Make sure you have your paperwork in place. Get a business plan ready. Make sure you have 3 months’ worth of bank statements, all your tax returns, cashflow forecasts and maybe even a business plan prepared and ready to present and most importantly make sure you keep your property portfolio spreadsheet up to date.
Like any change in regulations it will take time for lenders to get to grips with a new way of doing things so be prepared for frustrations to start with.
Our team of female advisers are here to help you to sort your finances out so that you don’t have to face it alone, we are here for you, so contact us today for a free no obligations consultation.