Virgin Money’s Lower Stress Tests – Any Good?

Virgin Money today announced improvements to there buy-to-let stress tests – the formula used to limit the maximum loan based on the rent a property can achieve.

Originally this was 5.5% at 145% for purchases.
Today it is 5.0% at 145% for purchases.

As an example on a rent of £500 Virgin capped the borrowing at £75,235 with the changes you can now borrow up to £82,758

See Also: How is Buy to Let Affordability Assessed?

Unfortunately, the lower Virgin Money rental stress tests are for Five Year Fixed Products only others stay at 5.5%.

Following in line with other mortgage lenders having lower rental stress tests for five-year fixes by using an exemption in the PRA rules.

How does this compare? Well a bit better.

Precise Mortgages for Basic Rate Taxpayers & Limited Companies on five-year fixes have a stress test rate of pay rate at 125%. The pay rate on a 5-year fix at Precise can be as low as 3.94%

As an example on rent of £500 precise limits the borrowing at £121,800 that is a full £39,000 more than Virgin Money.

When it comes to Buy-to-Let in low yield areas such as the South East, it can become paramount to talk to a specialist Buy-to-Let mortgage broker.

Otherwise, there could be almost £39k extra deposit you would need.

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