Virgin Money improves buy-to-let affordability assessment

Virgin Money has made a series of changes to its buy-to-let lending policy.

As part of the changes, the lender's Interest Cover Ratio (ICR) has been lowered to 125% for basic rate taxpayers. Virgin has also improved its stress rate calculations for both portfolio and non-portfolio landlords.

For remortgaging with no additional borrowing, stress rates will now be calculated at the higher of 5% or pay rate +1%.

For purchase or remortgage with additional borrowing, fixed rates below five years or variable rate mortgages will now be calculated at the higher of 5.5% or pay rate +2%, while 5+ year fixed rates will be calculated at 4.5% or pay rate +1%.

Virgin's two-year fixed rate products currently start at 5.76% and five-year products from 5.32%, so its stress rates now start from 6.76% and 6.32% respectively.

The changes follow NatWest cutting its buy-to-let stress rates earlier this week, while Santander decided to increase its buy-to-let stress rates last week.

Craig Calder, head of secured lending at Virgin Money, said: "A vibrant rental sector plays a key role in the wider mortgage environment and as such we have made changes to our Virgin Money buy-to-let mortgage lending policy.

"We continue to evolve our mortgage policy and these changes ensure that we are supporting landlords through an improved affordability assessment."