YBS Commercial revamps buy to let mortgage offer


Tom Simpson, Managing Director of Commercial Lending at Yorkshire Building Society (1

YBS Commercial Mortgages has implemented some positive changes to its buy-to-let offering this week, providing much-needed support for landlords.

Following broker feedback, the commercial lender has reduced the stress rate applied to buy-to-let affordability calculations on its commercial buy-to-let products.

The positive change effectively increases the volume of lending that can be provided to borrowers.

The stress rate has been reduced from 125% Interest Rate Cover (or Interest Cover Ratio – ICR) at pay rate plus 0.30%, to stressing at 125% ICR at pay rate (pay rate is interest rate on the loan).

This move recognises the reality faced by UK landlords who face a challenging interest rate environment, as well as ongoing economic headwinds.

These changes are designed to support landlords in areas where rents are lower relative to property value, taking into account the costs faced by landlords.

The change will increase what they can borrow, subject to remaining within the lender’s 75% loan-to-value (LTV) criteria.

This will enable landlords to borrow more on these properties, freeing up capital to invest, or to undertake property maintenance.

For example, for each £1 million of assets, based on a yield of 4% (rental income of £40,000 per year), assuming a five-year fix at 5.60%, landlords will be able to borrow around 5.5% or £30,000 more.

Tom Simpson, managing director of YBS Commercial Mortgages, said:

“We understand the role that landlords play in providing much needed, quality rented accommodation, which in the current climate, are in short supply.

We hope that reducing our stress rate – which is another example of how we continue to respond to broker feedback – will provide the support that their landlord clients need, improving their ability to borrow more in the current, more challenging interest rate environment.

As a responsible lender, focussed on the importance of high-quality accommodation, these changes will also benefit tenants, as more landlords have access to our product suite.”