Confused by mortgage decline

dlk

ACG said:

£90k at 6.5% is £487. 145% of that is £700. 
Your rent is £600. 
145% of 6.5% would be around £75k mortgage. 

Speak to a broker. There is probably a solution and at normal rates but your options will be limited. 

It isnt 90k I was using the 7.5% at. The maximum they'd lend with rent at £600pm is £66275 to be precise.

My actual mortgage payments at the amount would be £265pm while at a 7.5% stress test rate would be £414pm. At 145% rent to mortgage that would enable a mortgage of pretty much bang on £600pm. I'd just be surprised that the interest rate used would be over 7.5%

Nothing i can do about it but I still just dont really get it, seems a bit odd

advisertryingtohelp

Most buy-to-let lenders don’t assess affordability based on the actual mortgage payment. They apply a stress interest rate (often 6–7% or higher) and then require the rent to cover that stressed payment by around 125–145%.

On an £89k loan that stress calculation can push the required rent into the £700+ range depending on the lender’s model.

It’s fairly common for one lender’s calculator to decline while another lender would accept the case, so it may simply be that the particular lender you tried has a stricter rental coverage calculation.