How is BTL stress tested?

Hi

I was approved for a buy to let mortgage with PTSB and at the time of application I put the property purchase price at €350,000. That was 6 months ago so now I have since sent them updated bank statements, payslips etc to extend the AIP. I have also asked for the property purchase price to be increased to €365,000 to reflect house price growth. I'm looking to purchase most likely in Balbriggan where I am also living.

What I'm concerned now is that I will not be able to borrow the amount needed for stress tested amount and im not certain the bank manager I was dealing with was advising me correctly on this. He has since left the bank.

So my understanding is they take the current BTL rate of 5.55% and increase by 2%. However they then take amount stressed at 7.55% and multiply by 1.5 times. If I was borrowing €238,000 this brings the stressed amount to little under €2700. This means I need to be able to verify that I can get at least this in rent which would be difficult to prove.

It says on their website that the above stress testing is for non resident applicants but as I'm resident should the stressed amount just be the repayment amount at 2% higher so 7.55% with no further multiple applied?

Also how is the rent achievable validated? Is this just by daft reports?

There is a 3 bed property on daft in Balbriggan advertised at €2700 but I'd assume the bank would want so me greater evidence that just this to validate the rent achievable.

Anything useful here?

lightspeed said:

This means I need to be able to verify that I can get at least this in rent which would be difficult to prove.

Click to expand...

They want to know that you can cover it with income, not just rental.

It's been a while since I borrowed to purchase a BTL, (I pay in cash now); so things may have changed.

But in the past PTSB required to see that you had six months of mortgage payments available in cash, they stress tested by 2% and they only took into account 50% of the projected rental income. My memory is that they had the worst BTL rate as well, you might find ICS better to deal with.

I get that but the stress testing seems excessive and also the website says that for non resident the stressed amount that is increased by 2% is multiplied by 1.5. I'm not following why the distinction if it is the same for resident BTL applicants?

The guy I was dealing with in the bank didn't have experience with BTL and said the excel he was inputting the figures into was a new version and some of the formulas might not be right.

I rang PTSB mortgages line but they said they wouldn't know anything about the stress testing so would take my details for the Balbriggan branch to contact me. I don't think the woman that replaced the previous guy I was dealing with knows much on BTL either.