Similar to their residential counterparts, buy-to-let mortgages require applicants to tick a number of boxes before money changes hands.
Traditionally, requirements for BTL mortgages are based on both the property's potential as an investment and the buyer's financial background, including their annual income.
BTL mortgage provider BM Solutions, which is owned by Lloyds has now changed its criteria and removed the minimum annual income requirement of £25,000. The lender's reason behind the change? They believe that the affordability of a BTL property depends more on the actual property and the rental income it is likely to achieve than the buyer's finances.
Buyers are still required to state their annual income on the application, though. A step in the right direction? We're undecided. Whilst we agree with the notion that the success of a BTL investment is largely down to the selected property, there is an argument to check the buyers finances on a more general basis to ensure they can afford the property in the long term.
On a different note, Prime Minister David Cameron used this week's Prime Minister's Questions to clarify that the government's Help to Buy scheme will not extend to BTL mortgages, but is squarely aimed at owner-occupiers. Also excluded are those without a UK credit history to avoid foreign buyers benefitting from the scheme.
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