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 140% of interest payments at the higher of pay rate + 2% or 5.5%
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 / 140% / the higher of either, interest rate + 2% or 5.5% (%) = Max lending.
*For £4£ Remo a reduced stress of pay rate + 1% is used.
The above is subject to a max LTV of 75%.