Interest cover ratio

There are no minimum personal income requirements for our Holiday Let mortgages, but your client will need to show the property can yield sufficient income to service any borrowing.

We require a minimum rental income of 145% of interest payments.

  • 2 year fixed – the higher of, pay rate + 2% or 5.5% *
  • 5 year fixed – pay rate

We use a 30-week assumed occupancy as an average of the weekly high, medium, and low season rental income.

How to calculate max lending

1 – Calculate annual income:

Add low, medium & high weekly rental income and divide by 3 (average weekly income).

Times the total in step 1 by 30 (assumed number of weeks occupancy).

2 – Calculate max lending:

Annual income / 145% / interest rate (%) = Max lending.

*For £4£ Remo a reduced stress of pay rate + 1% is used.

The above is subject to a max LTV of 75%.