Barclays to accept personal income when assessing BTL affordability

Barclays has announced a new approach to calculating mortgage affordability that will act as a boost for many buy-to-let landlords.

Following a successful pilot conducted last year, Barclays will now allow any shortfall in the rental income used to calculate affordability to be met by the applicant’s disposable income.

Under the new approach, customers would be required to complete a full income and expenditure assessment involving disclosure of the following:

• Net Income
• Commitments and dependents 
• All residential mortgages (including permissions-to-lets)
• The total of all BTL mortgages outstanding and the total rent received
• The application does not go into retirement and there are no foreseeable changes to their income
• The new policy will help individuals looking to realise their goal of  supplementing their income or enhancing their capital growth plans by investing in a rental property.

Derram Attfield, 42, a self-employed recruitment professional in London is one of the first to benefit from Barclays’ new policy.

“There’s no guarantee of a state pension being available when it comes to my retirement and being self-employed I recognised the importance of having a good retirement plan in place,” he said, “Barclays’ new policy has helped me to purchase a rental property and to maximise the opportunity of both the growth in equity in the flat, and the regular rental income, to support my pension plans.”

Andy Gray, Barclays managing director of mortgages, said: “There are only a handful lenders that allow any shortfall in the rental income used to calculate affordability to be met by the applicant’s disposable income. Barclays’ new policy provides a greater opportunity for those planning for their financial future and choosing to invest in rental properties to help support their longer term goals of, for example, paying for their children’s’ university fees or enhancing their lifestyle in retirement.”