Family Building Society has announced a series of significant changes to its lending criteria and mortgage products, designed to enhance affordability and provide greater borrowing potential for both limited company landlords and owner occupiers.
Key among the changes is a reduction in the minimum Interest Coverage Ratio (ICR) for all limited company buy-to-let (BTL) applications, which has been lowered to 125%.
In a further expansion of its BTL offering, the society will now accept houses in multiple occupation (HMO) and multi unit freehold block (MUFB) applications up to a maximum of 75%.
Additionally, HMO applications will now be accepted from both individual and expat landlords.
For owner occupier borrowers, new affordability stress test changes coming into effect from 31st July will generate an increase in affordability outcomes by between 9% and 13% in most cases.
The society has also adjusted the assessment of interest-only applications: where the repayment strategy involves no associated cost – such as downsizing or selling another property – the application will now be evaluated based on the interest-only payment, regardless of the mortgage term selected.
In addition to the criteria enhancements, the society has announced rate reductions across several product lines.
Within the core repayment range, 2-year fixed rates have been reduced by 0.05%, while 5-year fixed rates remain unchanged.
The Joint Borrower Sole Proprietor (JBSP) range has seen a 0.05% reduction on 2-year fixed rates and a 0.10% cut on 5-year fixed rates, with no application fees for these products.
The 95% LTV Family Mortgage has also been reduced by 0.10%.
Buy-to-let customers are also set to benefit from reduced rates.
For UK landlords, all 2- and 5-year fixed rates have been cut by 0.05%, with new fixed rates now available for HMO properties.
Limited company BTL products see a similar 0.05% reduction across all 2- and 5-year fixed rates, alongside the introduction of a new 5-year fixed rate product accessible through select intermediaries and packaging partners.
Expat landlords will also see a 0.05% reduction in 2-year fixed rates, with 5-year fixed rates remaining unchanged, and new fixed rate options introduced for HMO properties.
Darren Deacon, head of intermediary sales at Family Building Society, said: “Improving affordability options for our BTL and owner occupier products provides greater flexibility for borrowers looking to maximise their mortgage borrowing.
“The reduction of the ICR to 125% will be, I’m sure, particularly welcomed by limited company landlords.
“This change, alongside our philosophy of manual underwriting, flexible criteria and rate reductions will provide a real boost to intermediaries looking to provide more lender choice to their borrowers.”
