Precise Mortgages, the specialist lender, has put its Buy to Let calculator online so that brokers can see how much their clients can borrow.
The introduction of new PRA rules on Buy to Let affordability has left some brokers confused as lenders publish their new criteria. Many lenders have used a ‘bucket’ approach which has seen Interest Coverage Ratios (ICRs) increased to 145%. It means that many landlords can no longer borrow as much money as they did before the rule change, and in some cases will lead to a decline.
Precise Mortgages has done something different in launching bespoke ICRs which take every customer’s individual circumstances into consideration. The lender claims that in many cases its ICR calculation will help landlords get the buy to let mortgage they want. One example cited is where joint applicants have different tax positions, such as one being a higher rate tax payer and the other being a basic rate taxpayer. Worked examples have been published on the lender’s website which show how a bespoke ICR will return larger loan sizes than the ‘bucket’ approach.
Alan Cleary, Managing Director for Precise Mortgages, said: “Our Buy to Let calculator allows mortgage intermediaries to know how much their clients could borrow from us before they start the application process.
“They will also be able to compare and contrast different ways of setting cases up in order to achieve the best outcome.
“The calculator is similar to the one used by our underwriters to assess cases so it will save intermediaries and us time and effort. We believe that in the majority of cases a bespoke ICR will be superior.”
To find out more about the calculator and how it could help your customer get the loan size they want, click here.
Precise Mortgages, the specialist lender, has launched its lowest-ever bridging rate of 0.54% per month.
The mortgage product is exclusively available through its Premier Panel members and is aimed at standard and light refurbishment deals up to 50% LTV. The lender has also reduced rates on deals up to 60% from 0.74% per month to 0.64% per month.
Alan Cleary, Managing Director of Precise Mortgages, said: “We had our best ever year on bridging in 2016 and we intend to keep the momentum going.
“These are great rates and we expect them to be popular.”
For more details, call 0800 116 4385 or click here.
Precise Mortgages, the specialist lender, has today launched a new range of products for tenants using the Right to Buy scheme to purchase their existing home. The Right to Buy scheme helps eligible council and housing association tenants in England buy the home they have been living in, by offering a discount, of up to £103,900 in London or £77,900 outside London, on the price of the property.
Highlights of the range include:
• Loans up to 100% of the discounted purchase price
• Maximum loan up to 75% of the open market valuation
• 5 year fixed rate products available to help with affordability
• Some products in the range will offer a zero product fee option
• Options available for customers with a less than perfect credit profile
Alan Cleary, Managing Director, Precise Mortgages commented: “The Right to Buy range builds on our previous support of the Help to Buy Equity Loan scheme. This demonstrates our ongoing commitment to support government initiatives and borrowers who have been excluded by high street lenders.”
The ONS has recently published employment statistics under the title UK Labour Market: July 2016 and the thing that jumps off the page is the rising number of self-employed people and the growth rate in self-employed roles. There was 31.7m people employed as at the end of May 2016 some 624,000 more than a year earlier and the overall employment rate is at its highest level since records began in 1971 at 74.4%. Compared to a year earlier the number of employees increased by 319,000 to 26.71m representing 84.2% of all people in work; the number of self-employed people increased by 300,000 to 4.79m representing 15.1% of all people in work. The remaining 0.7% were people on government supported training schemes and unpaid family related jobs.
You can see from the stats that the growth in self-employed jobs is increasing at a much faster pace than that of employed roles but it continues to be the case that self-employed people find it much harder to secure a mortgage than employees. Most mortgage lenders require more proof of employment from self-employed people than they do from employees with the most common difference being a 2-3 year history compared to 12 months for employees. Obviously, there is additional risk for the lender in taking on a self-employed borrower but I think the differential in the underwriting and documentation required is disproportionate.
A few lenders like Precise Mortgages specialise in catering for the self-employed and have the risk management processes and skilled underwriters in place to ensure a good outcome for both borrower and lender. The slightly odd situation is that many lenders want 3 years audited accounts from a self-employed person (which in practice means they have been trading for nearly 5 years) but if an employee of that same firm applied they would only need their last P60 and three payslips!
It isn’t just employment statuses that are experiencing significant changes housing tenure is also in the headlines; statistics out recently show that home ownership is at its lowest level for 30 years and that the housing crisis is moving north with Manchester seeing the biggest declines of any major UK city. This isn’t new news, the Private Rented Sector (PRS) has been increasing for 25 years and the success of the buy to let finance has been instrumental in this growth.
The PRS is playing an ever increasing role in Society and whilst it is undeniable that many people simply cannot afford to buy their own home there is also a sizable number of people that choose to rent. Once considered a tenure of last resort, dominated by students and younger generations, we are now seeing a more diverse tenant population. The sector does continue to be popular with those in higher education and young professionals, but it is also now a sector with more families and older generations too. Unfortunately our politicians continue to use the housing market to score political points and to win votes and the continued assault on the buy to let market and the demonisation of landlords needs to stop before serious and permanent damage is done. Buy to let gross lending in Q2 post the SDLT deadline is significantly down, most notably driven by purchase transactions which have declined by c50%.
I hope that politicians and policy makers will pause for breath before making any more fundamental changes to this increasingly important market allowing the market to assess the impact of tax changes, tighter underwriting standards and of course the uncertainty caused by the EU Referendum.