Hinckley & Rugby Raises Buy-to-Let Loan-to-Value to 80%: What London Landlords Need to Know

A welcome boost in borrowing capacity for Buy-to-Let landlords

Hinckley & Rugby has recently increased the maximum loan-to-value (LTV) ratio on its Buy-to-Let (BTL) mortgage products to 80%, up from the more common 75% or lower limits seen in the current market. Alongside this, the lender has introduced two discounted mortgage products catering to both personal applicants and limited company landlords.

This move addresses the ongoing squeeze in product availability, especially for landlords seeking higher leverage. Loan amounts range from £100,000 to £750,000, offering flexibility for smaller buy-to-let purchases or portfolio expansions.

Why this matters: More borrowing, but with conditions

The increase to 80% LTV means landlords can now borrow up to 80% of a property's value, reducing the upfront deposit required. For many, especially single-unit or accidental landlords who may have limited cash reserves, this can unlock new acquisition opportunities or allow portfolio growth without tying up as much capital.

However, eligibility hinges on meeting updated Interest Coverage Ratio (ICR) requirements:

• Personal applications: 125% ICR for basic rate taxpayers, 145% ICR for higher or additional rate taxpayers.
• Limited company borrowers: flat 125% ICR.

The ICR measures whether the rental income sufficiently covers the mortgage interest payments, so higher thresholds mean landlords must demonstrate strong rental yields relative to borrowing costs.

Understanding the fees involved

Landlords should also factor in the associated fees when considering these products:

• £250 application fee
• £999 completion fee
• Valuation fees (variable)

These costs can affect the overall affordability and should be budgeted for in the financial planning stage.

Practical steps for London landlords

1. Review your current financing: Check existing mortgage arrangements and assess whether refinancing or new borrowing at 80% LTV could improve cash flow or portfolio growth potential.

2. Calculate your ICR: Use your rental income and projected mortgage interest rates to confirm eligibility under the new criteria. If your rental income is close to the threshold, consider how rent reviews or property improvements might increase yields.

3. Consult your mortgage adviser or letting agent: Ensure they are aware of these new products and advise you on the best options tailored to your tax status and property portfolio.

4. Update financial projections: Incorporate the higher LTV possibility and fees into your investment models to make informed decisions.

5. Communicate with tenants if needed: If refinancing leads to changes in rental terms or property management, keep tenants informed to maintain good relations.

Considerations for different landlord profiles

• Single-unit landlords: The reduced deposit requirement may make entry or expansion more accessible.
• HMO landlords: Higher loan amounts up to £750,000 could support larger property financing but ensure rental income projections meet ICR requirements.
• Portfolio landlords: The discounted products and increased LTV might enable strategic leveraging across multiple properties.
• Accidental landlords: The improved borrowing terms could facilitate professionalisation of your rental business.

What to watch next

Keep an eye on further announcements from Hinckley & Rugby and other lenders as the BTL mortgage market evolves. Changes in interest rates, regulatory requirements, or lending criteria may impact product availability and affordability.

How Rentals & Sales can support you

Our team offers comprehensive portfolio reviews, compliance audits, and tailored financing strategies to help you make the most of new lending opportunities. We can assist with:

• Assessing your current mortgage arrangements and identifying cost-saving options
• Calculating your ICR and advising on appropriate products
• Navigating application processes and associated fees
• Crafting tenant communication plans during refinancing

Contact us to schedule a consultation and optimise your property investment strategy.

Compliance disclaimer: This article is for informational purposes only and does not constitute financial advice. Landlords should consult qualified mortgage advisers or financial planners before making borrowing decisions.