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Clydesdale Bank BTL affordability assessment

18th January 2017

Following the recent minimum underwriting standards announced by the Prudential Regulation Authority, we are pleased to confirm that we will continue to conduct an overall affordability assessment of the customer's circumstances to underwrite BTL mortgage applications.

We've also maintained the additional requirement that the rental income must be at least 125% of the mortgage payment.

As a reminder, our BTL key criteria is summarised below::

  • One of the applicants must have a minimum basic earned or pension income of £30,000, excluding rental income. This rises to £75,000 for applicants with 4 or more BTLs. Importantly, these are the minimum amounts and the application is subject to an overall affordability assessment.
  • Residential & personal expenditure - we will make a full assessment of the client's residential and personal expenditure position to ensure we are comfortable with the affordability position. This will be assessed as if we were the lender on the client's residential mortgage. This means that, as a guide, the residential mortgage should be no more than 4.5x income, dependent on individual affordability.
  • Size of BTL mortgages - we will make a full assessment of the client's exposure to BTL mortgages to ensure that we are comfortable with the affordability position. As a guide, we would want the client to have no individual BTL mortgage (whether with ourselves or any other lender) of more than 4.5x income, dependent on individual affordability.
  • Joint liabilities with external parties - our affordability assessment is based solely on the income of our applicant. For example, if our applicant has a residential mortgage with their partner, who is not party to our BTL mortgage application, the assessment of residential affordability will not take the partner's income into consideration.
  • We can lend a maximum of £1,000,000 on up to 3 BTLs.
  • We can lend to first time buyers and for the purpose of letting-to-buy.
  • We cannot lend to anyone who either has more than 8 BTLs in their portfolio or who has a higher level of gross rental income than non-property related income.
  • We cannot lend on HMOs.

For more information on how we may be able to assist your clients, please contact your Relationship Manager.

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