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.
No income non-portfolio applications
For non-portfolio landlords whose rental income accounts for the majority or all of their total income, you must ensure the repayments and management of the security remains sustainable.
Further underwriting will be carried out and additional proofs to support sustainability may be required, for example one or more of the following:
- Evidence of personal savings to support 6 months’ rental income
- Evidence of additional household income*
- Evidence of available household funds to act as a sinking fund.*
* Household income/sinking fund will only be considered where the third party is a spouse/partner of the applicant and they hold a joint residential mortgage with them.
The application may be declined if we consider the exposure to be too high. For example, where they have a large residential mortgage solely owned or a large amount of unsecured debt not consistent with the household income.
To reflect the different taxable income levels of landlords, we apply the following stress rates:
|Stress rate||Product term under 5 years||5 year fixed products||10 year fixed products|
|65% LTV or below||65.01% LTV to 75% LTV||Over 75% LTV||75% LTV or below||Over 75% LTV|
|Remortgage (without capital raising)*||4.50%||4.99%||5.50%||4.50%||4.99%||4.00%|
|All other application types||5.50%||5.99%|
* Excluding Let to Buy
- For 2 year fixed/variable rate products, the higher of stress rate or product pay rate +2% will apply.
- For 5 year fixed products, the higher of stress rate or product pay rate will apply.
- For 10 year fixed products, the higher of stress rate or product pay rate +0.75% will apply on all applications.
- For remortgage applications without capital raising, the higher of stress rate or product pay rate (pay rate +0.50% if variable) will apply for product terms up to and including 5 years.
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.
For applicants whose total BTL lending with the Nationwide Group BTL exceeds £1 million on completion, an assessment will be made on any existing and proposed BTL properties to ensure sustainability (regardless of the number of properties). A stress rate of 5.50% and ICR of 145% will be applied to the client’s existing and proposed BTL properties, alongside a maximum aggregate LTV of 65%.
For further advances, individual loan elements will be stressed separately in line with the above.
Interest Cover Ratio (ICR)
In order to ensure the correct ICR is applied to the application, you need to key 100% of all existing BTL income.
To reflect the different taxable income levels of applicants, we have a range of ICRs that are applicable dependant on the customer and/or application. The gross rental income, confirmed by the valuer, must cover the monthly mortgage interest payment by at least:
Applies to all Limited Company applications (except HMO) and those in personal names where the following criteria is met:
- Applicants declare themselves to be Lower rate taxpayers and;
- Declared gross annual income is less than £50,000 per applicant, upon completion of the mortgage (less than £43,430 gross income in Scotland).
Of the existing BTL income input at DIP stage, we'll take into account the following in our assessment of an applicant’s overall income:
- 75% of all rental income (including existing and proposed BTLs with TMW)
- 100% of all other sources of income.
To qualify for the 125% ICR, personal applicants can 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 we'll add 75% of the new property’s proposed gross rental income to the applicants’ annual income. For joint applications, we'll add half of the 75% proposed gross rental income to each applicants’ annual income.
In order to validate that all applicants are lower rate tax payers and income meets the policy above, proof of income will be required in the form of a latest SA302 or tax calculation and the accompanying tax year overview (dated within 18 months of the DIP). See table below.
- Applies to applicants who don't meet the criteria above
- Applies to all HMO applications, regardless of tax status
View the portfolio landlords rental calculations and maximum LTVs on our dedicated Portfolio landlord criteria page.
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 are high levels of unsecured debt, Nationwide Group BTL exposure over £1m).
Income included in assessment:
- Gross earned income (Employed/ Self Employed)
- Pension income
- Total gross rental income
Acceptable proof of income:
|Landlord Type||Income type||Proof|
|Experienced Landlord||Self Employed||Tax Calculation & Tax Year Overview*|
|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.