Income criteria

Stress rates and interest cover ratio
Interest Cover Ratio
Portfolio landlords affordability assessment
Minimum income
Income proofs

Stress rates and interest cover ratio (ICR)

To reflect the different taxable income levels of landlords, we apply the following rental checks to ensure your client can cover their monthly mortgage interest payment:

Tax rate
Stress rate
ICR
20% or less
5.50%
125%
40% or more
145%

Exceptions apply:

4.99% stress rate
• A fixed rate product that has a term of 5 or more years
• A remortgage up to and including 65% LTV without capital raising
170% ICR
• Applications for Houses in Multiple Occupation (HMO) regardless of tax status

  • For remortgage applications without capital raising and fixed rate product terms of 5 or more years, the higher of stress rate or product pay rate (product pay rate + 0.50% for variable products) will apply.
  • For all other applications, the higher of stress rate or product pay rate + 2% will apply.
  • For Further Advance applications where the existing product is ending within 3 months, the higher of follow on rate + 2% or 5.50% will be used to stress the existing loan.
  • For existing customers switching products, no rental assessment will apply.

For remortgages, we'll apply the lower of the current rent or estimated rental value as given by the valuer. Rental income denominated in a currency other than pounds sterling (GBP) isn't accepted.


Interest Cover Ratio

125% ICR

  • Landlords must be lower rate tax payers (gross income of £45k or less in England/Wales or £43k or less in Scotland) upon completion of the mortgage.
  • Landlords must have no more than 3 rental properties (with or without a mortgage), including any TMW applications in progress.
  • For purchase and Let to Buy applications, 75% of the proposed gross rental income will be added to current gross income to account for the increase in taxable income.
  • Proof of income will be required in the form of a SA302 or tax calculation see table below

145% ICR

  • Applies to landlords who don't meet the criteria above

170% ICR

  • Applies to HMO applications, regardless of tax status

Portfolio landlord affordability assessment

All new TMW mortgage applications are assessed to ensure your client can cover their monthly mortgage interest payment, as per the existing policy.

We’ll also assess their existing portfolio to ensure the overall aggregate LTV and ICR is sustainable. The assessment will be based on the entire portfolio, including the new property and any rental properties without a mortgage.

The following rental calculations and maximum LTVs will apply across your client’s portfolio:

Rental calculation

Rental calculation across portfolio
ICR
Stress rate
145%
4.50%
  • Up to 10 mortgaged BTL properties
  • Nationwide Group BTL Lending up to £1,000,000
5.50%
  • 11 or more mortgaged BTL properties
  • Nationwide Group BTL Lending over £1,000,000

Maximum LTV

Maximum LTV across portfolio
75%
  • Up to 6 mortgaged BTL properties
  • Nationwide Group BTL Lending up to £750,000
65%
  • 7 or more mortgaged BTL properties
  • Nationwide Group BTL Lending over £750,000

For more information on the PRA's new portfolio landlord underwriting standards click here.


Minimum income

There is no minimum personal income requirement, however, proof of personal income may be requested to support an application. This will be used with other information relating to the landlord and property, to validate that the loan will be used for its intended purpose.


Income proofs

Income proofs will be required for landlords using the 125% ICR and may be requested for applications with a 145% ICR or higher (e.g. if there's high levels of unsecured debt, Nationwide Group BTL exposure over £1m).

Acceptable income:

  • Gross earned income (excluding bonus, overtime and commission)
  • Pension income

Acceptable proof of income:

Landlord Type Income type Proof
Experienced Landlord Self Employed Tax Calculation & Tax Year Overview*
Employed/Retired
First Time Landlord Self Employed
Employed/Retired Latest payslip/pension statement
No Taxable Income 3 Months Bank Statement

*if SA302 isn't available, an accountant's reference can be accepted. Please contact us with the accountant's details so we can request this.