Positive buy-to-let updates persist despite lender capacity issues – Armstrong


In my previous article, I discussed how July cooled off from the rapid price revision schedule of May and June.

However, following this, we have seen a handful of loan proposals suspend new business channels due to capacity, service and/or technology issues.

This is not to point a disparaging finger at these lenders in any way, as decisions like this are certainly not taken lightly, but what they highlight are the issues faced by brokers and their clients to get the right deal for them at the right time with the right lender.

This is an issue that is expected to persist, but many lenders have also taken positive action in the buy-to-let area to support brokers and their landlord clients.

Product launches

From a product perspective, Precise Mortgages has updated its line of renovation rental mortgages to help homeowners make their portfolios energy efficient. This includes the addition of exit products, a change from the previously proposed combination of short-term financing with a long-term exit.

The options differ depending on the type of renovation work to be carried out.

For those with a property that has an EPC rating of C or higher, or achieves a C after renovations, the Exit 1 renovation product offers rates starting at 3.79%. For work that includes some form of energy efficiency such as installing double glazing, upgrading a boiler or adding insulation to the attic, the rates on the renovation product of Output 2 start at 3.89%. For work aimed at making a property habitable, the standard output 3 product offers rates from 3.99%.

Foundation Home Loans has launched a “Summer Special” that provides a 40 basis point rate cut on its previous limited-edition five-year fixed-rate buy-to-let product. Available as part of its F1 product line – for borrowers with near-clean credit histories – the five-year “Summer Special” fix, offered at up to 75% loan-to-value (LTV), comes with a rate of 4.59 percent and an interest coverage ratio (ICR) of 125 percent to the pay rate for limited liability companies.

The maximum loan available is £1million, and the product is available to both limited liability companies and individual homeowner borrowers looking to remortgage or buy. It also comes with a free standard evaluation, no application fee, and a 2% product fee.

In addition, West One Loans has introduced a discounted two-year follow-up range for owners with non-standard properties. The range starts at 3.54% and is open to homeowners wishing to purchase or refinance a multiple occupancy home (HMO), multi-unit building (MUB) or other specialty property.

Criteria Updates

Turning our attention to the criteria, Hampshire Trust Bank has raised three of its limits relating to short-term let properties (i.e. holiday rentals).

First, the maximum number of short-term rentals allowed in a single portfolio has been increased from four to 10. Second, the maximum loan amount on a single short-term unit is now £1.5m, instead of £1m and, thirdly, the maximum short-term rental exposure in a portfolio is now £5m, down from £2m.

The specialist lender has also improved its specialist buy-to-let offering, which includes LLCs, HMOs and semi-commercials, by increasing its maximum loan size to £25m from £15m. sterling.

As the holiday season draws to a close, I expect increased activity in the buy-to-let space and lenders will need to carefully manage their volumes and capacities to maintain the momentum generated in the sector. in 2022 so far.

Cat Armstrong, Mortgage Club Director at Dynamo for Intermediaries

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