Buy to let lending criteria

The assessment of rental cover will be made on an interest only basis. This is the basis on which the loan is agreed. The rental calculation used will depend on whether a short-term or long-term fixed product is selected.

Please note: In addition to your earned income, we will also consider the potential gross rental income from the new Buy-to-Let (BTL) property. This could potentially increase your income to a higher tax bracket.

Our affordability assessment will take into account costs that the borrower is responsible for, as well as changes to mortgage interest tax relief that started from April 2017.

If you have Buy to Let properties with other mortgage providers, the rental income from those properties must cover 145% of the pay rate. We will not accept any excess rental income from those to compensate for any deficit in the rental cover calculation. Also, we will not consider income from the client's employment or self-employment. 

The expected rental income must be confirmed by an independent valuer from the Newcastle Building Society panel before it can be used. If the loan is a remortgage on an existing property that is currently being let, we may consider using the current rental income received instead. At least one applicant must have an earned income. 

In some cases, we can consider income taken from a self-invested personal pension. In this situation, please refer to your Business Development Manager (BDM). 

The minimum age for applicants is 21 years old, with no maximum age limit. The maximum number of applications we will accept is two. We only provide loans to people or joint borrowers who are UK residents. The loans must be held in individual names. We do not accept applications from limited companies, trusts, or Special Purpose Vehicles (SPVs).  

If any part of the property or land is to be used by the borrower or a connected person (such as a spouse, partner, child, parent, or grandparent), we cannot accept the application. This is classified as a regulated Buy to Let, which we do not lend on.   

We do accept applications classified as Consumer Buy to Let (CBTL); see criteria below. We do not accept applications from first-time buyers. To qualify, applicants must currently own a residential property that serves as their main residence or have another Buy to Let mortgage. To clarify, in joint applications, at least one of the applicants must be a next-time buyer.  

All applicants will face a credit search upon submitting a new application. They will require a history of at least three years of UK addresses. There will be no exceptions to this requirement. Existing borrowers can take on new loans, but they must meet all the policy criteria for Buy to Let lending. All new loans will be underwritten to the same standards as a new borrower's application. New terms and conditions will apply to both new and existing loans. 

We may consider applications for properties purchased at auction.

Please note:

• A physical valuation will be required for all auction properties.
• Auction purchases often have strict completion deadlines. We will process applications in line with our usual service standards, we cannot guarantee completion within auction timescales.
• Newcastle Building Society accepts no responsibility for any financial penalties, loss of deposit or other costs incurred if an auction purchase does not complete within the required timeframe.
• Please see our unacceptable properties section to make sure the property is within criteria before applying.  

The Mortgage Credit Directive has introduced a new type of lending called Consumer Buy to Let. Borrowers in this category will have more protection against complaints and compensation compared to regular Buy to Let investors. 

We define a CBTL as a mortgage where all the below conditions are met: 

• The loan is for remortgaging 
• The borrower is a first-time Buy to Let landlord 
• The borrower, or a close family member, has lived in the property in the past

Our Mortgage Advice team does not currently offer advice on Consumer Buy to Let mortgages. Therefore, if the customer requires any further variations to their mortgage, they will need to contact their intermediary.

Intermediaries must be registered with the FCA (Financial Conduct Authority) to provide advice and recommendations on Consumer Buy to Let business. The intermediary must confirm this registration when they submit the application.  

If the loan is classed as a business Buy to Let, the borrower must sign a declaration. This will confirm that the loan is for business purposes, and they understand that they will not receive the same level of protection as a regulated loan. 

As part of our overall assessment, we will credit score all Buy to Let mortgage applications. This is to assess the financial risk of applicants. Applicants will be credit-scored at the DIP stage, and this will leave a soft footprint on their credit file. If the case proceeds to a full mortgage application, a hard footprint will be left.   

The credit score will either accept, decline or refer applications to underwriters for a manual assessment. 

You can easily register and submit a Buy to Let DIP by visiting our online portal. When you register online, you will create your own login details. Once your registration is approved, you will become part of our panel of advisers. We aim to review your registration within three to five working hours, Monday to Friday, from 9am to 5pm. 

After you are accepted, you can log in and receive an instant decision in principle. This decision will confirm whether a client has been approved for a mortgage with us. Additionally, you will be able to manage the DIP cases you have submitted online. 

Once you have completed the DIP, you can proceed to the full application process. Our document upload tool allows you to easily submit any supporting documents required. 

We accept applications for both property purchases and remortgages. The minimum loan amount is £25,000, please refer to product details for variances. The minimum value of the property is £75,000. The maximum LTV is 80%. The minimum loan term is five years, while the maximum loan term is 25 years. The maximum loan amount for each property is £1,000,000.  

For purchase applications, the deposit must come from the applicant's own sources. Documents to prove this may be needed at the request of the underwriter. It is acceptable for the deposit to come from: 

• Remortgage of another of the applicant's Buy to Let properties
• Remortgage of the applicant's existing residential property
• A gift from a family member (See gifted deposit form)

If the deposit comes from a remortgage, the applicant must have owned the property for at least six months. The LTV limits apply to both individual applications and on an aggregated basis regarding Buy to Let portfolios mortgaged with the Society. 

The maximum total amount that an applicant can borrow from Newcastle Building Society is £3,000,000. This includes any residential mortgage that the borrower has with the Society. Each investor is allowed to mortgage up to three properties with the Society. This limit also applies to the number of mortgaged Buy to Let properties including where the borrower is a Guarantor. Buy to Let properties mortgaged to Newcastle Building Society would count towards the three-property limit. Buy to Let properties that are rented out, but not mortgaged, would not count. 

Loans can be arranged on either a repayment or interest only basis, or a combination of both. If an interest-only element is requested, information about how the loan will be repaid at the end of the mortgage term must be provided. Selling the security or other Buy to Let properties are an acceptable means of repayment in this case. 

Further advances will be considered, but they are subject to product limits and maximum LTV exposure. 

Capital raising will only be considered where the funds will not be used to consolidate any unsecured lending, credit card debt, or existing Buy to Let mortgages, etc. The maximum LTV ratio remains 80%. Our underwriters may request further information or proof about how the funds will be used. 

In line with our residential lending policy, we need to verify your income and employment. Please refer to the affordability section for specific income requirements. 

Applicants must provide evidence that all current residential and Buy to Let mortgages are performing well. This will be initially checked by the credit search at DIP stage.  Evidence, such as a recent annual mortgage or bank statement may be required. This is to show sufficient payment over the past year. This is requested at our choice. 

All applicants are expected to disclose the full extent of their Buy to Let portfolio both at DIP and full application stages. This will include information on: 

• Address of the property 
• Date of purchase 
• Original purchase price 
• Tenancy type 
• Current monthly rent 
• Estimated value of property 
• Current mortgage balance outstanding 
• Current mortgage payment 
• Details of lender and reference number 

These details will be verified against Land Registry information. In addition to a credit report and external checks on the plausibility of rental income. 

To accept an application, the following criteria must be met by new and existing applicants.

• No County Court Judgements (CCJs) have been registered in the past three years, regardless of if they have been satisfied or not. 
• No CCJs registered within the last six years are still outstanding or were only satisfied within the last three years. 
• No registered secured or unsecured credit defaults in the past three years, regardless of if they were satisfied or not. 
• No current arrears on secured payments or a recent history of non-payment. 
• No Debt Relief Order (DRO), Individual Voluntary Arrangements (IVAs), or bankruptcy that have only been satisfied within the last three years. 
• No previous cases of repossession. 
• No active debt management. Any debt management programme must be settled for at least 12 months. A satisfactory credit record must also have been shown since that time. 

Our underwriters may consider a maximum of two satisfied defaults or CCJs below £250 if from utility, phone or mail order companies within the last three years. There must be a satisfactory explanation. This is still subject to the whole case being of good quality. 

We accept the following types of Power of Attorney documents: 

• Ordinary Power of Attorney (OPA), also known as General or Limited Power of Attorney 
• Enduring Power of Attorney (EPA) 
• Lasting Power of Attorney (LPA) for Property and Financial Affairs 
• Court of Protection Orders (COP) 
• Continuing Power of Attorney (this is the Scottish equivalent to the Lasting Power of Attorney for Property and Financial Affairs) 

We also accept the government access code beginning with V to view electronic LPAs. 

The document must be valid and complete. It should include specific provisions allowing the attorney the power to borrow mortgage funds on behalf of the donor. The mentioned types of POAs and some COPs grant the power to buy and sell property. The power to borrow mortgage funds is not standard. This power must be clearly noted in the document.  

When submitting a mortgage application with any of the documents mentioned above. Please fill out the Registration of Power of Attorney (Court of Protection Deputyship Order) form completely. 

Applicants must have lived in the UK for at least three years and be a UK resident at the point of application. To consider a non-EEA national applicant, documents proving their indefinite leave to remain in the UK should be provided. 

We will carry out a credit search to check applicants are registered at their current address on the voter roll. We will review the credit report to confirm the applicant has maintained credit at current or past addresses provided. 

Like our standard residential policy, applicants must provide documents proving their residency at their current and past addresses. 

We will use an electronic verification check to confirm the applicants' identities. If more documents are needed after the DIP assessment, we will let you know. 

1. Only Assured Periodic Tenancy agreements  (or Scottish/Welsh equivalents) will be accepted.
2. There is a limit on the number of properties we will finance within a single development. This limit is either 10% of the total development or a maximum of three properties, whichever is lower. 

Unacceptable properties

Our standard residential policy applies to unacceptable properties, with the below restrictions for Buy to Let. 

• Houses in Multiple Occupation (HMO). 
• Properties requiring any development work other than cosmetic refurbishment before being rented. 
• Properties involved in a sale and leaseback arrangement, a back-to-back transaction, or those with assignable contracts. 
• Properties with more than five bedrooms. 
• Properties that were previously owned by local authorities and are still in the pre-emption period. 
• Shared ownership or shared equity properties that are subject to sales restrictions or secondary charges from the developer or housing association. 
• Student lets with more than four tenants. 
• Properties rented to individuals who are not permitted to reside in the UK. 
• Properties with an EPC rating below E (properties below this rating need to be brought up to standard prior to application or have a valid exemption).

All properties must have a minimum purchase price or valuation (whichever is lower) of £75,000.

Valuation policy 

In all cases, we will instruct a valuation for our benefit, and the cost will be charged to the applicant. We will not accept any valuation instruction from a third party. 

Each valuation will include an estimated rental yield determined by the valuer. This yield will be used to assess if the loan passes our rental stress test. The rental stress is calculated on an interest only basis. This is even if a repayment or part and part loan is needed. 

Our panel of regional valuers are highly experienced. We have full confidence that the valuation they provide will represent the property's true market value. 

As a result, we're unable to accept any appeals against the valuation of the property. 

If your client has an unusual property, please reach out to our Intermediary Support team. Call them on 0345 602 2338 (available Monday to Friday, 9am to 5pm) or contact your Business Development Manager.