Godiva Mortgages tightens criteria

Coventry Building Society’s buy-to-let arm Godiva Mortgages has announced tough new criteria for buy-to-let borrowers.

Currently Godiva requires landlords to have a rental cover of at least 125% – with the interest rate calculated at 5% regardless of the pay rate. 

But landlords with a deposit of less than 35% will now need rental cover of 125% calculated on a higher rate of 5.5%.

Only those who take out a five-year fixed-rate deal will avoid the change.

The move comes hot on the heels of a Bank of England report which suggested it may intervene in buy-to-let lending. This could mean new affordability rules or lending caps. 

Barclays has already changed its criteria for buy-to-let borrowers. It recently upped the rental cover required from 125% to 135% calculated on a pay rate of 5.79%.

Mark Harris, of mortgage broker SPF Private Clients, predicted that "the market is moving towards a situation where only those with a 50% deposit are likely to qualify for a loan".

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