How will Precise Mortgages' enhanced affordability criteria impact my eligibility for new build buy-to-let mortgages?
Quick Answer
Precise Mortgages' enhanced affordability for new build buy-to-let loans could mean you can borrow more, as they might assess your rental coverage based on achievable rental income, potentially at a lower stress test rate.
## Understanding Precise Mortgages' Enhanced New Build Affordability
Precise Mortgages, like many lenders, adjusts its criteria to cater to specific market segments. When they enhance affordability for new build buy-to-let (BTL) mortgages, it typically means they are willing to lend more or make it easier to qualify for these types of properties. Here's a breakdown of how this usually works and what it means for you:
### What 'Enhanced Affordability' Often Means
1. **Lower Stress Test Rates:** The most common way lenders enhance affordability for new builds is by lowering their BTL stress test rate for these properties. While the standard BTL stress test for many lenders now is typically 125% rental coverage at a 5.5% notional rate (as per current market averages), enhanced criteria for new builds might see them stress testing at, say, 4.5% or even 4.0%. This means a lower rental income is required to support the same loan amount, allowing for greater borrowing.
2. **Higher Loan-to-Value (LTV) Potential:** In some cases, enhanced affordability could translate to slightly higher LTVs being available for new builds, though this is less common than stress test adjustments and depends heavily on market conditions and the lender's risk appetite.
3. **Acceptance of Achievable Rents:** For new build properties, particularly those still under construction or recently completed but vacant, lenders might be more flexible in accepting a projected, 'achievable rent' for their calculations, rather than requiring an existing tenancy agreement. This relies on accurate valuations and often, a valuer's report on market rent.
### Why Lenders Do This for New Builds
Lenders often favour new build properties due to their inherent qualities:
* **Lower Maintenance Costs:** New builds generally have fewer immediate maintenance issues, reducing risk for both the landlord and the lender.
* **Higher EPC Ratings:** Modern construction often means better energy efficiency. While the minimum EPC for rentals is currently E and proposed to be C by 2030, new builds typically exceed this, making them future-proof.
* **Developer Relationships:** Lenders often have commercial relationships with developers and benefit from supporting new housing stock.
### Impact on Your Eligibility
Enhanced criteria generally make it *easier* to qualify and potentially borrow more for a new build BTL purchase. If the primary challenge for you has been meeting the standard rental income coverage (e.g., 125% at 5.5%), then an enhanced criteria reducing that notional rate will directly increase your borrowing capacity.
However, you still need to meet all other aspects of Precise Mortgages' lending criteria, including personal affordability outside the BTL stress test, credit score, and portfolio limits. Always consult with a mortgage broker specialising in BTL to get the most accurate and up-to-date information for your specific circumstances. They can compare Precise Mortgages' offering with others on the market, taking into account the fact that BTL mortgage rates are currently ranging from 5.0-6.5% for 2-year fixed and 5.5-6.0% for 5-year fixed deals.
Steven's Take
Precise Mortgages targeting new builds with enhanced affordability is a savvy move on their part and a potential goldmine for investors. In a market where Section 24 means you can't deduct mortgage interest as an individual landlord, making the numbers stack up is tougher than ever. A lower stress test rate means your rental income goes further, directly increasing your borrowing power. I built my portfolio by understanding how lenders think, and this is a classic example of a lender trying to capture a specific segment. New builds often come with higher price tags, but typically better energy efficiency which will save you grief when the proposed C by 2030 EPC rating comes in. Get onto a broker who knows this niche well.
What You Can Do Next
Contact a specialist buy-to-let mortgage broker to discuss Precise Mortgages' specific new build criteria.
Obtain a reliable rental valuation report for the new build property, clearly stating achievable rental income.
Gather your personal financial documents (income, outgoings, existing property portfolio details) for the broker.
Understand the full terms of Precise Mortgages' offer, including actual interest rates (e.g., 5.0-6.5%) and any fees.
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