The new assessment, in effect from today, requires borrowers to provide three months bank statements which will be assessed by an underwriter who can treat each case on its individual merits to ensure the account is well maintained.
Alan Cleary, managing director of Precise, said: “This is a game changer for our product. It is a positive move towards common sense lending where we assess the loan is affordable rather than imposing an arbitrary rule on our borrowers.”
Previously Precise’s buy-to-let customers needed a minimum earned income of £25,000, employed or self-employed, which ruled out the use of rent as a source of income.
Cleary added: “This should allow more professional landlords to approach Precise who are capital rich but in receipt of income largely made up of rents received.”
Underwriters will be looking for evidence that the borrowers lifestyle is affordable. Tell-tale signs that a borrower is struggling are charges for exceeding agreed overdrafts, bounced cheques and direct debits and the use of payday loans – all of which would raise concerns with underwriters and are likely to lead to the application being declined.
Cleary pointed out that whereas a borrower with an earned income of £20,000 could now be accepted for a buy-to-let mortgage subject to a satisfactory bank statement assessment, someone with a £50,000 salary who would have automatically been accepted in the past may now be declined for poor account conduct.
Cleary added: “Good quality borrowers will be able to obtain mortgages they otherwise may not have qualified for because of arbitrary rules. We have considered these changes very carefully to ensure we continue to lend in a responsible and compliant manner and within our credit risk mandate.”
Precise has also made a change to its near prime range by increasing its maximum loan from £300,000 to £500,000.