BM Solutions is updating the notional/stress rate used in the rental assessment for buy-to-let and let to buy applications from 22 November.

At present, the lender’s rental calculation is based on 125% of the mortgage interest payment at a notional/stress rate of 5% or the initial product pay rate whichever is the higher.

To ensure customers have sufficient rental coverage, particularly for higher LTV applications, the notional/stress rate will now be tiered as follows:

• Where the application is for a five-year fixed rate product, a notional/stress rate of 4.99% will be used or the product rate whichever is higher irrespective of LTV.
• Where the LTV is less than or equal to 65%, a notional/stress rate of 4.99% will be used or the product rate whichever is higher.
• Where the LTV is greater than 65%, a notional/stress rate of 5.49% will be used or the product rate whichever is higher.

Phil Rickards, head of BM Solutions, said: “In order to provide first class products and service to borrowers we monitor our criteria and processes continuously. This change ensures landlords have sufficient rental coverage for their buy-to-let mortgage, importantly there’s no change to the application process and the calculations will be made automatically.

“However, in a rapidly changing environment we want to give advisers as much notice as possible.”

The update applies to all full buy-to-let and let to buy applications submitted from Sunday 22 November. Any changes made to applications on or after this date will be subject to the new notional/stress rates.

The BM Solutions Rental Income calculator has been updated to reflect this.