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From our June Ezine

We have seen an upsurge in demand for second charge buy-to-let mortgages after recent regulatory changes and product innovation.

From 1 January, the Prudential Regulation Authority (PRA) has imposed loan to income limits on regulated mortgage contracts.

In addition, the introduction of the Mortgage Credit Directive in April 2015 means the LTI limit would automatically apply to second charge deals, which are currently exempt.

PRA stress tests are severe and can include tax liabilities meaning some rental calculations can reach as high as 160%. It means second charge deals can be used. Firstly, some lenders can avoid PRA rules and secondly, due to product innovation in the sector providing a better offering.

These changes are already having an impact and this year has seen growing demand for second charge mortgages when landlords want to raise additional capital.