Family Building Society has unveiled a series of changes to its lending criteria and affordability assessments, designed to give borrowers greater financial flexibility across both buy-to-let and residential mortgage ranges.

The mutual has reduced the minimum Interest Coverage Ratio (ICR) for all limited company buy-to-let applications to 125%. This change is expected to significantly increase the maximum borrowing capacity for corporate landlords.

In a further expansion of its buy-to-let proposition, the lender will now accept applications for Houses in Multiple Occupation (HMOs) and Multi Unit Freehold Blocks (MUFBs) up to 75% loan-to-value.

HMO applications have also been opened up to individual and expat landlords for the first time.

STRESS TESTS

From 31 July, owner occupier borrowers will benefit from revised stress testing criteria that the lender says will typically improve affordability results by between 9% and 13%.

In a separate change to the assessment of interest-only applications, borrowers using a no-cost repayment strategy – such as downsizing or the sale of another property – will now be assessed purely against the interest-only payment, regardless of the term.

Darren Deacon, head of intermediary sales at Family Building Society, said: “Improving affordability options for our buy-to-let 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.”

RATE REDUCTIONS

The affordability improvements are accompanied by modest rate cuts across several product lines. On the core repayment range, 2-year fixed rates have fallen by 0.05%, while 5-year fixed rates remain unchanged.

For joint borrower sole proprietor products, the lender has trimmed 2-year fixed rates by 0.05% and 5-year fixed rates by 0.10%, with no application fee now payable on these offerings.

In the Family Mortgage range, the 95% LTV product has been reduced by 0.10%.

Buy-to-let fixed rates for UK landlords have dropped by 0.05% across both 2- and 5-year terms, with new fixed rate products launched for HMO properties. Limited company landlords will see the same 0.05% reduction on 2- and 5-year fixed rates, alongside the introduction of a new 5-year fixed product available through select intermediaries and packaging partners.

Meanwhile, expat buy-to-let borrowers will benefit from a 0.05% reduction on 2-year fixed rates, while 5-year rates remain unchanged. New fixed rate products for HMO properties have also been launched in this segment.