Skipton International has loosened its lending criteria for UK buy-to-let mortgages for overseas residents.

The Guernsey-licensed bank says the change in criteria, which comes into effect immediately, allows rental income cover to be 110%, rather than standard 125%, on loans over £250,000.

It adds qualifying applicants must earn over £100,000 a year, and debt to income ratios must come in at under 20%.

The maximum loan to value remains at 75%, and the offer is only available on the basis of one facility per client at 110%.

The bank says for a property valued at £1m, with a rental of £2,250 per month, based on its current five-year fixed rate of 3.24%, additional borrowing of £83,400 may be available.

It adds that it stress tests BTL applications at 5.50% on base rate tracker products and at the payrate on five-year fixed-rate products, for which the rental income is required to be 110%.

Skipton International business development manager Roger Hughes says: “The reduction in rental income cover means Skipton is able to account for more of the rental income than previously, which could potentially lead to enhanced lending.

“The UK property market remains in pretty good shape and, while some uncertainty remains, the fears of Covid-19 resulting in mass unemployment, recession and falling property prices have abated.

“Customers meeting the criteria will now have their mortgage application assessed at 110% of the annual rental income on our three-year base rate tracker, at 5.5% stress test, or at the payrate on any five-year fixed rate. This, therefore, gives greater borrowing capacity against their rental yield.”