The Mortgage Works has released more information on its approach to portfolio lending ahead of new underwriting standards. In accordance with the
The Mortgage Works has released more information on its approach to portfolio lending ahead of new underwriting standards.
In accordance with the Prudential Regulation Authority’s expectation of firms’ underwriting standards, which come into force on 30 September, The Mortgage Works will define a portfolio landlord as a borrower with four or more distinct mortgaged buy-to-let rental properties.
The company, which is part of Nationwide Building Society, has also announced it is investing in a new online system that will allow brokers to complete portfolio property details on mortgage applications.
These can then be validated and the results sent to the underwriting team for assessment.
The interest cover ratio will be fixed at 145 per cent, with houses in multiple occupation (HMOs) remaining at 170 per cent.
The Mortgage Works confirmed there will be no changes to loan-to-value limits, maximum loans sizes or minimum income criteria.
Customers will be required to disclose their income at the decision in principle stage, although proof will not be required in all cases.
Stress rates and the number of properties accepted will remain the same.
Additional questions will be put to portfolio landlords at the decision in principle stage if the customer has or will have four or more mortgaged properties.
These will be intended to establish more about the value, rental income and outstanding mortgage balances secured against the whole property portfolio.
Paul Wootton, managing director of The Mortgage Works, said: “Following the confirmation of our commitment to supporting portfolio landlords and intermediary partners through the transition to the new Prudential Regulation Authority underwriting standard, we are now providing further detail on how we are going to address such cases.
“This is to give the clarity landlords and brokers need to help them with their planning at a time of ongoing change for the buy-to-let sector.”
The Mortgage Works will also provide regular updates for intermediaries on a dedicated portfolio landlord changes webpage, which will provide the opportunity for questions to be asked of the provider.
David Hollingworth, associate director of communications at London & Country, said: “The fact that The Mortgage Works has issued details on its proposal to participate fully within the market is to be welcomed.
“I’d expect it to pre-empt a flurry of statements from other lenders who will have been working hard behind the scenes to ensure they will comply with the PRA’s requirements before the September deadline.”