Buy to Let Stress Test

Virgin Money Buy to Let Affordability Stress Test Change

As of Today (5 December 2016) Virgin Money has changed the lending “Interest Coverage Radio” and “Interest Rate Stress” following guidance form the The Prudential Regulation Authority (PRA) that regulates banks.

The lender currently stresses applicants’ income at a rate of 5.74%, its buy-to-let variable rate plus 1%, but will lower this to 5.50%

You can secure current products by ensuring Bespoke Finance submit a Full Mortgage Application (FMA) on or before Friday 16 December 2016.

The banks Interest Coverage ratio is now 145%.

The banks Interest Rate Stress is now 5.50%, for all fixed rate and tracker rate products less than 5 years.
The banks Interest Rate Stress is now 4.74%, for all fixed rate and variable rate products for more than 5 years.

( The stress rate for five year fixed rate products is the higher of the product rate or our Buy to Let Variable Rate (currently 4.74%). )

The PRA set a legal minimum of 125% at 5.5% – Virgin has made the decision to stress BTL mortgages higher than this, presumably due to the PRA also requiring the removal of mortgage interest relief being removed from the Taxation of landlords.

Virgin Money is not the first to change its Buy to Let Stress test early (legal requirement 1 January 2017) and other lenders will shortly follow.

We expect to see other lenders using the Five Year Fixed Rate Exception as Virgin Money has.

Although perhaps more competitive as Virgin’s Five Year still meets the PRA minimum – Landlords will have to wait and see.

So.. how much can I borrow based on my rent?

Virgin Buy to Let Stress Test as of 5/12/16

Virgin Buy to Let Stress Test as of 5/12/16

Other Virgin Money Changes

Virgin Money has announced other restrictions on Landlord Borrowing for Buy to Let Purposes this includes excluding portfolio landlords who have 11 or more properties in there portfolio in total.

In addition to a cap with landlords with more than 11 properties the maximum maximum portfolio limit of £2 million and/or four properties with Virgin Money remains unchanged.

The lender aiming at the small landlords and as the market trends change the lender has not yet announced a Limited Company Buy to Let proposition.

The rates are good!

The restrictions may make landlords wonder about how attractive they are.

Virgin Money sends a clear signal with its low rate 60% LTV Buy to Let Products that they are still in the market for Buy to Let Business:

  • 2 year fixed rates at 60% LTV available from 1.59% (with £500 cashback)
  • 5 year fixed rates at 60% LTV available from 2.48% (with £500 cashback)

If you are interested in a Virgin Money Buy to Let Mortgage or need to mortgage before other lenders increase there Buy to Let Affordability Stress test then call Bespoke Finance on 08009202001 or email

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