Precise Mortgages, the specialist lender which launched its MCD compliant platform on 15th February has paid out on its first MCD compliant second charge loan which was submitted by Fluent Money.
The second charge loan was for £175,000 at a rate of 4.55% per annum, giving an APRC of 5% and completed on 25th February 2016..
Alan Cleary, Managing Director of Precise Mortgages says: “We were ready for MCD in plenty of time so it is business as usual as far as we are concerned and I am not surprised that Fluent Money were the first to get a loan paid out as they too have been ahead of the game..
Tim Wheeldon, Joint Managing Director at Fluent Money commented, “Preparation and cooperation between both ourselves and Precise Mortgages were the key components in ensuring this case completed without a hitch. There has been a lot of hard work on both sides, but MCD should hold no concerns for advisers and their clients when we can demonstrate that lenders and distributors, who are properly prepared, can complete cases just as quickly as before.”
Precise Mortgages, the specialist lender which launched its first HMO mortgage products last month, has expanded its lending criteria to accept properties with up to eight bedrooms – an increase from the six accepted when the products were initially launched in January. Last month, the lender also launched Ltd Company products as well as improving its criteria for buy to let landlords in retirement.
Mortgage brokers can submit HMO and Ltd Company buy-to-let cases through authorised packagers, as well as direct with the lender.
Alan Cleary, Managing Director of Precise Mortgages says: “Our specialist buy-to-let products have been really well received by mortgage intermediaries. In order to meet ongoing market demand, we are continuing to expand both our product range and lending criteria. Both professional and retired landlords will increasingly need specialist products as taxation plays a bigger role in their overall investment decisions.”
Doug Hall, Director of 3mc added: “It’s great to see a major specialist lender enter the HMO space. Precise Mortgages have launched into more new product areas so far this year than most lenders will do in an entire year. More choice and more competition equal good news for brokers and their customers. Also, it is great that these products are available via 3mc club as well as the packaged route.”
We are delighted to announce that Precise Mortgages received four new awards at the recent Mortgage Strategy awards on 17th February for…
Best Specialist Lender
Best Short-term Bridging Lending
Best Secured Loan Lender
Mortgage Strategist of the Year - Alan Cleary, Managing Director
View more awards here.
Many column inches have been dedicated to buy to let of late, with some headlines predicting the end of the market.
I regard those headlines as provocative, lacking any strategic thinking and certainly not supported by basic facts.
We are all aware of the headwinds in the market in the form of: the Basel Committee on Banking Supervision consultation paper on the standardised approach for credit risk; changes to taxation for landlords; and the Financial Policy Committee’s powers of direction. Allow me to tackle them one by one.
The BCBS consultation paper potentially increases the amount of capital some lenders are required to hold for buy to let loans, therefore making them less profitable for the lender and less attractive as an asset class, despite the sector’s outstanding performance during the financial crisis. This could force prices up for consumers or see some lenders move away from buy to let. The likelihood of this proposal coming in as it stands, however, is in question. It will need a lot of consultation before being finalised. In any event, it will not come into force until 2019 at the earliest and most likely only in stages over several years. Some lenders may consider moving to the internal ratings-based approach, which will mitigate the risks entirely.
Meanwhile, changes to buy-to-let taxation begin in the 2017/18 tax year, which means the first financial impact on landlords will be in January 2019. The size of the impact for the average landlord will be additional tax of £500-£600 a year, so not a deal-breaker. It certainly does not make the average buy-to-let look like a poor investment, especially when compared to alternatives. It is likely to be completely negated by increases to rents anyway.
Those most affected by the tax changes will be owners of low-yielding properties that are highly geared. Take, for example, a £1m property at 75 per cent LTV with a rental yield of 4 per cent. The change will reduce the landlord’s profit after tax by around £6,000 a year in the 2020/21 tax year. However, this type of property is typically in London and landlords who buy there have never got rich on rental yields. Indeed, they are more likely investing for house price inflation: at 2 per cent HPI, this landlord’s property will be appreciating by £21,000 per annum in the same tax year.
Many of these landlords will utilise limited company structures to take rental income into a corporate regime, thus avoiding the tax change entirely.
Powers of intervention
The final headwind is the FPC’s potential power to intervene in the buy-to-let market if it feels it is overheating and/or proving a threat to financial stability.
The two mooted areas of control are around LTV and interest coverage ratio limits, which, taking the controls it uses in the residential market as a proxy, may mean lending above a certain LTV or ICR will be limited to around 15 per cent of new business in any one quarter.
I am encouraged by the tone from the FPC in that it does not intend to use these powers until it has seen the effects of the taxation changes.
So what about the tailwinds? Well, there continues to be a significant supply gap when it comes to UK homes. Even if government initiatives deliver the new-builds planned, this gap will remain; in fact, it is more likely to continue to increase. With this in mind, house prices should continue to rise too.
The cost of buying will remain higher than the cost of renting, due to consumers having insufficient deposits or income, and this will drive continued growth in the private rental sector.
The Government’s primary policy objective is to increase homeownership, particularly for first-time buyers. A secondary objective is to ‘cool’ parts of the housing market, particularly the buy to let sector. We do not believe it is the Government’s intention to destroy buy to let because the private rental sector is a large part of the overall market and a critical source of housing.
Like many others, I encourage policymakers to consider the second-order consequences of intervention in the housing market (such as significantly increasing rents) and to ensure decisions are based on accurate data.
Precise Mortgages, the specialist lender, has today launched an Ltd Company buy to let product which will be available from Thursday (21.01). Rates start at just 4.09% and the products are available to a £3 million loan size and up to 80% loan to value.
Highlights of the new product:
• Unlimited properties with other lenders and up to 10 to a maximum of £5m with Precise Mortgages
• Maximum age at application 80, maximum term 30 years
• Personal ownership to Limited Companies allowed with equity gifts and capital raising
• Newly formed SPVs allowed
• Near prime available
• Bridge to Limited Company available