Precise Mortgages, the specialist lender, will launch Income Supported Buy to Let next week, allowing customers with excess income to bridge the gap between the rent achieved by their property and the rent required to achieve the loan they want. This addition to its already extensive suite of products is designed to help mortgage intermediaries assist customers who may find themselves excluded from the buy to let market by the lending policies of high street lenders.
With no restrictions to product selection, Income Supported Buy to Let opens up the buy to let market to more customers who want to invest in property. It is available for purchase and remortgages, including capital raising, so customers who don’t want the additional administration of a limited company will have an alternative to help them get the loan they want.
Via its online portal, Precise Mortgages will give brokers the option to provide their customer’s income details and will present achievable loans based both on an ICR and combined ICR/income basis allowing the broker to select the best approach.
Alan Cleary, Managing Director of Precise Mortgages, said: “We believe that Income Supported Buy to Let will be a real game changer, particularly where customers are struggling to get the loan size they need. We have built this into our online systems so the sales process should be very slick.”
Danny Belton, Head of Lender Relationships at L&G Mortgage Club, added: “After what has been a tough year for the buy to let market, it’s great to see a lender such as Precise Mortgages recognising the challenges in the sector, and providing solutions for both mortgage intermediaries and their clients.”
For full details refer to Precise Mortgages’ website from Tuesday 5th December.
The PRA’s changes to tighten up lending criteria and ensure consistency have sent tremors across the lending landscape. Borrowers with four or more mortgaged buy to let properties are now classified as ‘portfolio landlords’ and subject to more stringent underwriting standards.
In its Supervisory Statement released at the time it announced the changes, the PRA said: ‘The PRA expects firms to recognise that existing experience and skills acquired in buy to let lending do not automatically translate into equivalent skills when assessing portfolio landlords. Lending to portfolio landlords is inherently more complex given the quantum of debt in aggregate, the cash flows and costs arising from multiple tenancies, and potential risks of property and/or geographical concentrations.’
As well as having to provide more in-depth information for new applications, brokers and landlords now also have to submit details for all the other properties in their portfolio. It’s caused an increase in the volume of work for both parties and, as a result, all lenders have had to radically rethink the way in which they’ll lend to portfolio landlords in the future.
We’ve seen lenders adopt a wide range of different approaches. Some lenders appear to have given very little thought to the impact on brokers’ sales processes and fee earning ability – they’ve pushed the burden onto the brokers by asking them to key in the portfolio details into their systems, meaning more work for the brokers for the same amount of money. Other lenders have announced they won’t be lending to portfolio landlords at all.
Imagine you’re a broker submitting a £100,000 buy to let application. Before the new regulations were introduced, you’d have earned a proc fee of around £400 for doing this. Now imagine your customer is applying for a new buy to let mortgage and already has 10 other properties in their portfolio. Following the introduction of the new regulations, not only do you now have to key in the details for the new application, you also have to supply data for the other properties too, all for the same £400 proc fee. You can see where the problem is and why some brokers might be reluctant to help portfolio landlords in the future.
It all means the market is now much more complex, with the expectation that specialist lenders will cope better with the changes than the larger ‘vanilla’ high street lenders. Certainly, as portfolio lending becomes more specialised, brokers and landlords will be less likely to go to lenders who aren’t providing them with the support they need.
Here at Precise Mortgages we thought long and hard about how we could minimise the disruption to brokers and landlords, while meeting the new requirements at the same time. We’ve set up a dedicated Portfolio Team who do the ‘heavy lifting’ for brokers by keying in the additional information – business plans, assets and liabilities statements, and details of existing residential property portfolios – required by the new regulations. Brokers can submit the information on our forms, landlords’ documents or any other format.
Although the long-term effects of lending to portfolio landlords are likely to be significant, there will be opportunities for specialist lenders and brokers who are prepared to adapt and evolve to the changing market. By making things as simple as possible and minimising the impact of the change, these lenders can help brokers and their customers concentrate on doing what they do best – growing their buy to let businesses.
Precise Mortgages, the specialist lender, has appointed a new Business Development Manager to ensure brokers in the South Yorkshire, East Midlands and South Midlands regions get the support they need.
Danielle Batchelor will look after intermediaries in the Derby, Doncaster, Huddersfield, Leeds, Lincoln, Milton Keynes, Nottingham, Northampton, Sheffield and Wakefield postcodes.
Danielle joins Precise Mortgages from Aldermore where she was responsible for looking after brokers in a similar patch to her new role with Precise Mortgages. She also gained valuable experience with the Coventry Building Society where she worked as a mortgage advisor before moving into the telephony Business Development Team.
Danielle is the latest addition to Precise Mortgages’ Sales Team. In the past year the lender has appointed Business Development Managers in the North West, North East, West Midlands, East Anglia and South East regions to help and assist brokers in these regions.
Danielle said: “I’m delighted to be joining Precise Mortgages at what is a really exciting time for the company. It’s a patch I’m already familiar with, so I’m looking forward to getting out and helping brokers access our fantastic and broad range of solutions for the specialist market.”
Jamie Pritchard, Head of Sales for Precise Mortgages, said: “Danielle’s energy and commitment will fit in superbly with the rest of the team.”