The expected rental as well as the rental stress that the lender will apply will also limit the borrowing capacity. If you are finding it difficult to estimate what the expected rental for a property that you are interested in purchasing will be you can talk to us and we can provide you with information on some useful tools that will assist you in getting an idea of the rental that you can expect.

Lenders use a stress test to determine how much mortgage a borrower can comfortably afford. This will usually involve a lender working out the monthly payment based on an interest rate that they choose. This will then be multiplied by a percentage (coverage) value in excess of 100% and the result is what the minimum monthly rent should be to fund the mortgage amount that you require.

For example:
You would like to borrow £300,000
The lender that you apply to uses an interest rate of 5% with a coverage value of 125%.

5% of £300,000 = £15,000
To arrive at the monthly payment the lender will divide £15,000 by 12 = £1,250
Then it would be multiplied by the coverage percentage of 125%:
i.e. 125% of £1,250 = £1562.50

Therefore, the minimum rent that you require to get a loan of £300,000 is £1,562.50 with the above example. As our landlord customers often require the maximum loan, we will always research the market and try to find a lender that whose stress rate aligns with the amount of loan that is required, having a large panel of lenders that we can choose from helps us to achieve this.

No. Different lenders may choose to use a different interest rate to stress test. We will try to find a lender from our Whole of Market panel whose stress rate is in line with the mortgage amount that is required.

Yes you can.
Very few lenders offer this option, however, we do work with lenders that will happily issue a limited company mortgage to trading businesses allowing our customers to purchase the property in the name of their trading business.