Interest Coverage Ratio (ICR)
BTL test: monthly rent must exceed a multiple of monthly mortgage interest.
Full definition
The Interest Coverage Ratio is the buy-to-let stress test: monthly rent must cover a multiple of monthly mortgage interest at a stressed rate. Standard ICR is 125% for basic-rate taxpayers, 145% for higher-rate taxpayers or limited-company landlords. Stress rate is typically 5.5-8%. This is usually the binding constraint on a BTL purchase.
How this affects you
Whether interest coverage ratio (icr) is relevant to your mortgage depends on your circumstances — lender, product, deposit, employment, credit profile, and stage of application. An FCA-authorised mortgage broker will tell you exactly where it applies to your case.
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