Income Assessment

Interest cover ratio
Stress rates
Personal income

Interest cover ratio

The gross rental income, confirmed by the valuer, must cover the monthly mortgage interest payment by at least:

Interest cover ratio (ICR)
Buy to Let and Let to Buy
Houses in Multiple Occupation (HMO)
Tax rate of 20% or less
Tax rate of 40% or more
125%
145%
170%

125% ICR

  • Borrowers 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 with no more than 3 rental properties (with or without a mortgage).
  • All rental properties are included in this total, including any in-flight purchase or LTB applications with TMW.
  • 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 see table below

145% ICR

  • Applies to borrowers who do not meet the criteria above

170% ICR

  • Applications for Houses in Multiple Occupation (HMO) regardless of tax status

125% ICR Income Proofs

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
No Taxable Income 3 Months Bank Statement

Stress Rates

4.99% applies for

  • Fixed rate products with terms of 5 or more years
  • Remortgages up to and including 65% LTV without capital raising

5.99% applies

  • Where overall Buy to Let lending with the Nationwide Group is over £1m (before or after new loan)

5.50% applies

  • For all other applications
Application Type Product Term under 5 Years Fixed Rates
5 Years and over
65% LTV and lower over 65% LTV
Remortgage
(without capital raising)
4.99% 5.50% 4.99%
All other application types 5.50%

Additional Information

  • 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 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.


Personal income

Whilst there is no minimum personal income requirement, proof of personal income may be requested to support an application. This will be used in conjunction with other information relating to the applicant and property, to validate that the Buy to Let loan will be used for its intended purpose.

Where applicants are using the 125% ICR, proof of income is required.

We reserve the right to request proof of income on any case to support assessment of the application (e.g. high levels of unsecured debt, Nationwide Group BTL exposure over £1m).

Eligible income is defined as:

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

Acceptable proof of income:

  • Self employed applicants: Latest SA302 (self assessment tax calculation form)*
  • Employed applicants: Latest payslip
  • Retired applicants: Latest payslip/pension 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.