Q4 2019 Buy to Let Mortgages
Commercial Mortgages
Development Finance
Bridging Finance
Residential Mortgages
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WELCOME
WELCOME CONTENTS 2-3 Welcome 4-5 6 7
Auction Finance for Buy to Let Landlords Buy to Let Mortgage Index Q3 2019
Welcome to the last edition of First Rate in 2019! As I write, we are fresh from the result of the most polarised election that the country has seen in decades. The Conservatives secured a strong majority, Labour suffering its worst defeat since 1935.
Looking Forward to 2020
The result has seen Stirling surge against the Dollar and the Euro as a result of the initial 8-9 Buy to Let | Case Studies outcome, with the FTSE 100 climbing when the market opened. During the morning of the result, the share prices of 10-11 Converting Commercial Property Into Residential housebuilders rallied, such as Persimmon PLC, Barratt Developments Buy to Lets PLC and Taylor Wimpey to name a few. 12-13 Lender in the Spotlight
It’s too early to comment on what the Conservatives are likely to implement from their manifesto over the next year and what the 14 Setting up an SPV Limited long-lasting impact is likely to be on the economy, but we finally have Company a clear view on the approach to the late January Brexit deadline. 15
Autumn and Winter reports 2019
16 HMO Mortgages for Scotland 17 Commercial | Case Studies 18-20 UK Holiday Market Special 21 Residential | Case Studies 22 Self Employed Mortgages: Dispelling the Myths & Legends 23 MFB News 24
Mortgage Best Buys
ADVICE TO READERS No part of this publication may be reproduced without permission of Mortgages for Business. While every care is taken to ensure accuracy of content, no responsibility can be taken for errors or omissions. The views expressed in this publication are not necessarily those of Mortgages for Business. Readers are strongly advised to check information published with individuals institutions, and to take legal advice, where approprate, before entering into transactions.
The Conservative manifesto pledged to stick with their target to build 300,000 new homes per year by the mid-2020s. Johnson has pledged to encourage long-term fixed rate mortgages and he has hinted that when the Help to Buy scheme ends in 2023 there will be new ways to support First Time Buyers, but the details are yet to be seen. For Landlords, it would appear that they intend to follow through on their plans to remove Section 21 and end “no-fault evictions”. This is something that I suspect may rumble on for some time yet and will be highly scrutinised by the industry as more is known on what form it will take. As a result, the economists are looking positively at the housing marketing for 2020. Liam Bailey, Global Head of Research at Knight Frank, noted: “The Conservative Party has won a majority of just under 80 seats in the UK general election. As a result, the UK is likely to leave the European Union on 31 January, with a vote in Parliament and a Queen’s Speech expected before Christmas. This will, for the time being, end the uncertainty of a no-deal Brexit and pave the way for the release of some of the pent-up demand that has built in property markets in recent years. The strong election win could mean there will be more stability in the housing market.” Despite the ongoing political upheaval throughout 2019, I have been impressed by the continued resilience of the professional landlord this year. As we put together our business plan for 2020, I have been encouraged by the many conversations I have had with landlords planning on expanding their portfolios next year. Landlords appear to be taking an optimistic approach and this is likely to be bolstered with the Conservatives taking a strong majority. 2019 has been a great year for MFB in terms of industry recognition and
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Q3 2019
WELCOME awards; we are thrilled to have finished off the year by winning ‘Best Buy To Let Broker’ at the recent National LIS Awards ceremony at the prestigious Grosvenor House Hotel. This is a great accolade to receive as the companies recognised are voted for by landlord and stakeholders in the buy to let market. As a specialist buy to let mortgage broker, we have watched with interest the recent merger of Kent Reliance owners, One Savings Bank, with the owners of Precise Mortgages, Charter Court Financial Services - both specialist BTL lenders who have helped many of our clients. I’m delighted that this edition’s Lender in the Spotlight features a Q & A with Adrian Moloney, Sales Director at OSB. As I mentioned above, our plans for 2020 are well underway and I am excited by our ambitions to grow and improve our service offering to our clients again. Work continues in the background on our exciting new Landlord Portal, which will allow you to track your applications and manage your portfolios online. We are on the hunt for some existing clients to volunteer to test out and provide feedback on our beta version. If you are interested in taking part, please contact the marketing team at marketingmortgagesforbusiness.co.uk. Also in this edition, you will see in the many case
studies dotted around, the great deals we have recently completed for our clients. As part of our ongoing commitment to putting our clients first, we are preparing ourselves to tackle the annual rush to get transactions completed before the end of the year, or rather before solicitors close down for the Christmas break! If you have an application in progress and are looking to complete before the end of the year, your dedicated case manager will be in regular contact to help keep the process on track. If you have any questions, don’t forget you can call us on 0345 345 67 88. Looking ahead to next year, I expect landlords to continue to take advantage of the historically low-interest rates, available for both remortgages and new purchases. We are likely to see a strong start to the year, however, this still depends on a successful and clear Brexit strategy put forward by Number 10 now a Conservative majority has been achieved. Finally, I would like to take this opportunity to wish you all a very Happy Christmas and the very best for 2020!
Steve Olejnik Managing Director, Mortgages for Business
Best Broker for Buy-to-Let
WINNER
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BUY TO LET | AUCTION FINANCE FOR BUY TO LET LANDLORDS
Auction Finance for Buy to Let Landlords Purchasing residential buy to let properties at auction is an attractive option for many landlords, but property auctions can be a daunting prospect for a first-timer. Consultant Broker, Glenn Franklin-Jones, explains how these auctions work, the type of finance you’ll need and the benefits of purchasing property this way… How do property auctions work? Auction houses usually publish a catalogue of available properties or add the lots to their website before the auction date, so you can look at the properties available. Each property will have a lot number and a guide price, set by the auction house. While the guide price will give you an idea of what price the property may achieve, it is likely (and to be expected) that the property will achieve a higher sales price, depending on the level of interest in the property. As with any auction, the highest bidder wins the lot.
What are the risks of buying property at auction? While many properties may only require basic modernisation such as decorating, or fitting a new bathroom or kitchen, some do require considerably more substantial work to bring them up to a lettable or sellable standard. This can include sorting damp issues, rewiring the electrics or even structural work.
You may find that some sellers expect a certain amount for their sale, so will set a reserve price that the property cannot be sold below. If this price is not met, the highest bidder will not be able to buy the property.
The key to auction purchasing is to Do. Your. Research. While all of the above is possible to overcome if you have the right skill sets, connections and funds to complete the work, for a novice developer, you may not wish to take on substantial problems such as structural issues or damp. However, there are several steps that you can take to reduce these risks.
On the day of the auction, most auction houses will expect a 10% deposit to secure your winning bid and then will allow 4-6 weeks to complete the purchase. Why purchase buy to let property at auction? Properties are sold at auction for many reasons, but can often be grouped into the following: • Vendors looking for a quick sale • Properties which are struggling to sell on the open market • Properties which require development or renovation • Repossessed properties Because of this, a lot of properties that are sold at auction require renovation work to make them sellable on the open market or before you can move tenants in. This means that you can potentially buy a property at a price lower than the market value.
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Before you attend the auction, you need to review the properties on offer and create a shortlist of those that you are interested in. Once you have your shortlist you need to do your research on each property, including reading the legal pack and viewing the property. You should undertake tasks which will incur costs, such as surveying costs and legal searches before purchasing, rather than finding yourself liable for a likely larger bill when something comes up as a surprise after you’ve purchased it. How does auction finance work? Auction finance is provided by bridging lenders, who are better equipped to complete within the 4-6 weeks that auction houses usually require. Bridging finance is a short-term loan with interest charged monthly, which you would repay either when the property is
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Q3 2019
BUY TO LET | AUCTION FINANCE FOR BUY TO LET LANDLORDS sold or moved onto a buy to let mortgage. When you apply for a bridging loan, the lender will want to know your “exit” strategy at the point of application. So, it’s best to decide what your exit plan is ahead of time. If you plan to keep the property as a buy to let investment, you will need a Decision in Principle (DIP) for a buy to let mortgage, before applying for your bridging loan. The DIP will be based on the predicted end value of the property after works have been carried out and will satisfy the bridging lender’s requirement for an ‘exit’ plan. We would expect bridging lenders to finance up to 75% of the agreed purchase price, however, this is usually a ‘gross figure’. Auction finance lenders often deduct the product arrangement fee and all the interest that would be charged over the term of the bridging loan, at the outset. After these deductions, you would normally be left with around 70% net finance towards the purchase. The benefit of this is that there are no interest costs to pay during renovation work on the property, or at the end. Some lenders will consider allowing you to repay the interest costs during the bridge term. The benefit of this is that it frees up a higher amount of finance towards the initial purchase. However, lenders are reluctant to offer these types of loans due to the financial stress of making repayments while works are being carried out. Lenders may consider you if you are very experienced at refurbishing properties or are of high net worth. Lenders will assess each case
individually and your broker will be able to help you put a case across if they think a lender will consider it. When do I apply for auction finance? First, you will need to approach a lender for an overview decision which is based purely on numbers: the deposit amount, current property value, expected property value, income etc. These are called ‘indicative terms’ and are subject to a full credit check which the lender will carry out once you have successfully bid for and put down the deposit on the property at auction. Assuming everything checks out and the lender is satisfied, credit backed terms can be issued within 24 hours. I didn’t win the bid on the property I wanted, but I’ve bought another – what do I do? If you’ve already secured indicative terms from a lender on a similar property, you will be able to discuss any changes that might need to be made with the lender. As long as the new purchase price and loan requirements are similar to those previously agreed, minor changes can be made and the lender can begin work on the credit backed terms to get the completion process moving. In this instance, I would recommend that you let the lender know about the changes on the day of purchase, to ensure the auction house completion deadlines can be met.
Property Tribes Partner with Mortgages for Business This Autumn, Mortgages for Business have partnered with Property Tribes to support the Property Tribes community in financing their projects and deals. As one of the largest UK landlord and property professional communities, Property Tribes offers community-generated news, views, legislation updates, opinions, strategies and best practices from a wide variety of contributors, who generously share their knowledge to all its members and visitors. It’s a great platform for landlords to keep up to date with the everchanging private rental landscape, through articles, discussion pages and interviews with industry authorities. They also boast the largest landlord-based YouTube channel, which passed the 1million views mark in September of this year! You can visit the Property Tribes community at www.propertytribes.com
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BUY TO LET | BUY TO LET MORTGAGE INDEX Q3 2019
Fixed or tracker rates? 2 Year Fixed Rates Gaining Popularity The trend for fixed rate products continued in Q3 2019 with almost all borrowers (97%) opting to fix rather than take a variable or tracker product, which are not as competitively priced. The proportion opting for a 5-year fixed rate fell slightly from 72% to 70%, but it remains the most popular. This is most likely to be because products with terms of five years (or more) are subject to less stringent stress tests, meaning that landlords can borrow more using them than with their 2 or 3-year counterparts. In addition to the popularity of the 5-year fixes, there has been an increase in the uptake of 2-year fixed rates, rising to 26% in Q3 from 21% and 18% in Q2 and Q1 respectively. 2-year fixed term products are cheaper than 5-year products and have a shorter tie-in period making them a more flexible choice for landlords in the current political and economic landscape. Three-year fixed rate products were only chosen by 1% of borrowers. This is unsurprising as they account for only 8% of products. For borrowers going down the product transfer route, 69% chose 2-year fixed rates and the remainder (31%) chose 5-year fixes.
For full results including average yields and average fees, please visit mortgagesforbusiness.co.uk or call in on 0345 345 6788 and request a hard copy.
No. of BTL mortgage lenders
Fixed Rate Buy to Let Mortgages
49 (+4)
Term
Q2 2019
Q3 2019
Average 5 year
3.51% (-0.07)
3.49% (-0.02)
Average 3 year
2.78% (-0.26%)
2.80% (+0.02)
Average 2 year
3.09% (-0.05)
3.09% (<>)
BTL Mortgage Lenders
37%
No. of Ltd Co BTL mortgage lenders
31 (+4) Average No. BTL mortgage products
1,909 (+198)
BTL Mortgage Products
64%
63%
36%
Lenders offering products to Ltd Co borrowers
Products available to Ltd Co borrowers
Lenders with no Ltd Co products
Products available to individuals only
Download the latest Buy to Let Mortgage Index from our website mortgagesforbusiness.co.uk 6
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Q3 2019
BUY TO LET | NEWS CASE STUDY & INSIGHTS
2020 is just around the corner... but what’s likely to happen With lenders lowering prices and widening criteria, in a hope to release the built up demand for investment purchases, Jeni Browne, Sales Director, looks ahead to 2020... 2019 hasn’t been the most dynamic year... on face value at least. The housing market has been slow, with things only just starting to pick up now. House Prices have seen some regions fair better than others, with some seeing reasonable growth (Wales and East Anglia to name a couple) and others a small reduction (the South East being one). The good news, if Savills are to be believed, is that we will see a small increase across the board in 2020, with an overall increase of 15% expected over the next five years. Rents are on the rise and average rents are up across all regions, with both pundits and experts expecting 5% year-on-year growth over the next 5 years. What has been interesting is the buy to let mortgage market. New lending in 2019 is expected to be similar to 2018 at £36bn, and I am predicting a reduction of 10-15% in 2020. My predicted reduction is due in part to the sluggish purchase market, but more so, because remortgage opportunities are slowing down as more borrowers locked into 5 year fixed rates (rather than 2 years) when the PRA set out their new guidance notes a couple of years ago. Whilst this could spell out doom and gloom, assuming we get our political lives sorted out and the housing market picks up, this number could bounce back up. The reason I say the mortgage market has been interesting is based on what lenders have been doing in response to the slower market. We have seen a rush to the bottom on pricing (which unfortunately had the knock-on effect of a couple of lenders stepping out on the basis that they couldn’t make the commercials work) and a widening of criteria as lenders sought to drive up volumes - Air BnB, Expats, Ltd Companies and specialist properties are all becoming listed on lenders criteria. In terms of how this will go next year, I would expect to see lenders continue to gently nudge their Risk Departments to widen criteria further, but I also think that service and customer experience is going to become ever more important... Offering the best service, with a frictionless application process should and will be on lenders agendas. This year has seen the industry move forward on developing online, smooth application processes and as we head into 2020, the industry will continue to gain momentum in its technological advances.
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BUY TO LET | CASE STUDIES
Two HMO and Multi-Unit Properties Purchased Under One Buy to Let Mortgage The Clients: A husband and wife, who already owned 2 vanilla buy to lets, were looking to expand their portfolio with their first multi-unit purchase. The Properties: The couple were looking to purchase 2 properties in a large university city, which were situated next door to each other, but that were on 2 separate titles. Property One was a 4-bedroomed student house, let on short ASTS. Property Two was a 4-bedroom HMO (House of Multiple Occupancy), with a further single self-contained flat within the property that fell below 30 square meters. This equated to 9 units, let to a mixture of professionals, students and tenants on benefits. The Finance: The seller of the properties wanted to sell them together at one agreed purchase price, with a completion before Christmas. The couple had a 25% deposit and needed a mortgage to complete the purchase. The Challenge: This case provided a number of challenges, including finding a lender which would: • • • • • • • •
Complete both the HMO and Multi-Unit properties under one loan. Value the properties at the true investment value, rather than simply the bricks and mortar value. Lend on a property containing a flat which is under the usual requirement of 30 square meters. Lend on the properties despite a right of way between the two houses which would remain under the ownership of the seller Lend to applicants with less than £25,000 of income, made up of rental earnings and a small business Accept the properties with existing planning permission for their empty cellars and a 12-year-old planning permission issue on one of the properties Offer overpayments on the mortgage without incurring ERCs Be able to complete before Christmas
The Solution: Having been let down by their previous broker, the clients approached Mortgages for Business for help. With our knowledge of the specialist lenders who would consider such an investment, we were able to approach a few with the case we put together with the clients. Due to the strong rental income of the two properties, and the couple’s existing landlord experience, we were able to secure a lender which would meet all of the requirements and was confident they could complete before the deadline of Christmas. Property value
£600,000
Loan amount
£450,000
Rate
3.49% 5 year fxed
LTV
75%
Term
25 years interest-only
Mortgage payment
£1,308 pcm
Rental income
£3,583 pcm
Lender arrangement fee
2% added to loan
Gross yield
9.6%
Adviser
Gareth Richards 01732 471627
Looking to purchase or refinance a Buy to Let Call us today on.... 0345 345 6788
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Q3 2019
BUY TO LET | CASE CASESTUDY STUDIES
Limited Company Buy to Let Investment for Self-Employed Consultant The Client: A self-employed consultant who already owned two buy to let properties in his personal name. Having sought expert independent tax advice, he decided that all future investments would be made through an SPV Limited Company. The Property: A standard four bedroomed, detached property, in a strong rental area which is within commuting distance of the capital and close to local amenities and transport routes. The Finance: The client was using surplus earnings from his consultancy business as a deposit for the purchase and wanted to take out a mortgage for the property via his SPV Limited Company. The Challenge: The client was looking for a competitively priced, short-term fixed rate with minimum product fees in order to keep costs down. The Solution: We have a strong relationship with a particular lender who only accepts Limited Company applications from a small group of brokers. Through them, we were able to get a competitive rate which, while not the lowest available, came with minimal product fees and a free valuation. For this client, those factors made it a better deal than just going with the lowest rate available. A successful mortgage offer was available within 10 days of submission.
Property value
£270,000
Loan amount
£200,700
Rate
2.74% 2 year fixed
LTV
74%
Term
25 Years interest-only
Mortgage payment
£461 pcm
Predicted rental income
£1,300 pcm
Lender arrangement fee
0.5%
Gross yield
5.76%
Adviser
Chris Longhurst 01732 471607
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9
BUY TO LET | CONVERTING PROPERTY
Converting Commercial Property into Residential Buy to Lets Converting a commercial property into a residential buy to let property can be lucrative, but do you know what’s involved in a project of this type? Consultant Broker, Glenn FranklinJones, explains how to finance small commercial to residential conversions and what you’ll need to do to get things off the ground… What type of commercial property are we talking about? This blog focuses on smaller commercial units that are likely to already have residential dwellings above or that are situated in a highly residential area where the demand for residential property is high; this includes small retail units or offices that you might find on a high street. What permissions will I need to convert a commercial unit into residential dwellings? Change of Use You will need to get a change of use granted via the local authority to convert a commercial property into a residential one. Planning Permission If you’re converting a commercial unit into any kind of residence, you will likely be changing the interior layout quite a lot. This being the case, you will need to get your plans approved by the local planning authority, to make sure that they adhere to residential planning regulations. The regulations that will be applied will depend on whether you are planning for one residential dwelling or multiple self-contained dwellings. As with any type of development, if you’re extending the property in any way you are likely to need planning permission for this too. In some cases, the planned changes may be permitted under ‘Permitted Development’, and therefore do not require planning permission. However, the regulation varies in each local authority, so you will need to check with your relevant planning office first. You can do a light check using the government’s planning interactive planning portal. Please keep in mind that you will require all the necessary planning permissions before you make a finance application to a lender, as they will want to see all this information as part of the application. How do I finance a commercial to residential conversion? The type of finance you will need to convert a commercial unit into residential is a ‘heavy refurbishment bridging loan’. It’s classed as ‘heavy refurbishment’, due to the need for planning permission, structural 10
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Q3 2019
BUY TO LET | CONVERTING PROPERTY
alterations and change of use, whereas ‘light refurbishment’ refers only to non-structural changes, such as general decorating and fitting of kitchens and bathrooms. Before you apply for your bridging loan, you will need to decide what you’re going to do with the property after the works are complete, as the bridging lender will want to know your “exit”. If you plan to sell it, the lender will need to be comfortable that the end sales price will cover the loan repayment. If you’re planning to keep the property and rent out the newly created residencies, we can secure a Decision in Principle (DIP) for a buy to let mortgage, which will enable you to pay off the bridging loan. The buy to let lender will also need to be satisfied that the rental income from the newly created properties is sufficient to cover the long term buy to let loan required. With heavy refurbishments bridging loans, most lenders require a maximum 70% loan to value (LTV) on the purchase price of the property, with rates starting from 0.74%* per calendar month. You will need to prove to the lender that you have the funds available to complete the works required to refurbish the property, to secure the bridging loan for the purchase. If you have more of a deposit, bringing the LTV down to 55%, we have access to lenders who will even consider funding some of the work required too, with rates starting from 0.54%* per month. In these cases, the loan will be calculated taking the purchase price and the cost of the works into account. The bridging finance application process When you’ve found a lender and bridging loan product that suits your requirements, we would expect you to receive credit backed terms within 24 hours of an initial enquiry. If you’re happy with these terms, the formal application can be made, documentation proving adequate income can be submitted, the valuation can be instructed, and the underwriting can begin. What experience do I need to convert a commercial unit into residential buy to lets? Lenders do tend to prefer applicants who have previous experience with similar refurbishment or development projects, however, they may consider first-time developers if you have an experienced builder working with you on the project. What about larger commercial conversions? Converting larger commercial developments, such as office blocks, requires more specialist, development finance that will likely fall to a commercial lender, which incurs different rates. This is something our commercial team can help you with, so please do get in touch for advice on development finance.
*Rates correct as at 12th November 2019. FirstRate
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11
BUY TO LET CASE STUDY LENDER IN THE SPOTLIGHT
Name: Adrian Moloney, OneSavings Bank Position: Sales Director Hobbies: Liverpool FC, Liam Gallagher Thank you for taking part in Q4’s Lender in the Spotlight. Please can you give our readers an overview of your background? I joined OneSavings Bank in 2015, taking responsibility for sales and distribution for the Kent Reliance for Intermediaries, InterBay Commercial and Prestige Finance brands. Previously, I worked for Nationwide as a senior member of the Corporate Accounts team and before that I had long stints at Mortgage Trust and Portman Building Society. All in all, about 21 years’ experience of working with intermediaries. It’s been an exciting year for OneSavings Bank – how has the company changed from this time last year? You’d have to of been living in a cave not to be aware of the combination of One Savings Bank and Charter Court Financial Services. Personally, I’m delighted that we’ve successfully completed our combination and would like to thank all those who had the vision and the expertise to make it happen. We’re in the early stages of integrating but it’s definitely going to be an exciting year ahead. What does the recent combination mean for Precise and OneSavings Bank? How has it benefited your position in the market? The combination affords us the unique opportunity to bring together the complementary strengths of the group across product capabilities and expertise, brands and team cultures. But for brokers its business as usual as we’ll be maintaining a multi-brand model that’s committed to the intermediary market. What have been the advantages of keeping Precise, Kent Reliance and Interbay as their separate brands? Brokers have told us all through the combination process that they want us to retain the lending brands and the propositions. This combination brings together the complementary strengths of both organisations, across products, brands and utilising the expertise we have within the business. The new combination will also look to take advantage of a more resilient diversified funding platform that we can deploy in growth opportunities. Can OneSavings Bank be accessed directly by 12
investors? No. We believe in the value brokers bring to investor relationships and therefore we have no intention of changing our intermediary only model. In terms of the underwriting processes, what can brokers and landlords expect when dealing with OneSavings Bank? Brokers can expect to receive consistency in underwriting decisions so they’ll receive stability and confidence for their specialist and complex cases. We also recognise the importance of providing multiple support lines, depending on broker preferences so we’ve delivered a few initiatives in 2019 including: •The ‘buddy’ system - each Senior Business Development Manager (SBDM) has an assigned “buddy” on the Broker Liaison Team (BLT) who can be contacted if the broker’s SBDM is unavailable, thereby enabling brokers to get a swift resolution. •Live web chat – an additional communication route to the BLT if a broker needs a quick reply to criteria related questions. •Portfolio submission support – I encourage brokers to utilise the support our BLT can provide for portfolio clients as they can enter portfolio details directly onto OSB’s dedicated portfolio platform (eTech) on a broker’s behalf. Due to the political turmoil, there’s been a lot of uncertainty in the buy to let market this year – how do you see this resolving in 2020? The backdrop of the political environment in recent years has presented the housing sector with a massive headache. To give a sense of the lack of direction, the next election with deliver the 7th Minister of State for Housing since the 2016 referendum. While the outcomes of the events on the 12 December and 31 January will hopefully provide a modicum of stability for next year. What challenges do you think we are still to face in 2020? The next Government must show their commitment from the outset to improving current levels of housing stock to clear the deficit we currently sit at. Only when more houses are built should the market see a real adjustment to average mortgage deposits and the age of first-time buyers fall. I would also encourage brokers to embrace the opportunities that specialist mortgages provide – don’t be afraid of them. There’s real potential within the specialist space for brokers to prove the value of their advice and service they can
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Q3 2019
LENDER IN THE SPOTLIGHT
give to their clients in a mortgage market that is becoming ever more complex. Where do you think the biggest growth areas in the market will be in 2020? Essentially with products that reflect market needs and demand such as lending for those with credit impairment, anything to give people help getting on the property ladder, such as shared ownership, will be key. I also think lending to older borrowers is a market that has potential for growth. If rates stay at historically low levels, then you can’t look beyond fixed products. Even though remortgage activity has hit ‘decade highs’, I still think there is plenty for brokers to go after if they are pro-active enough. What advice would you give to new and seasoned property investors to help them make a success of 2020?
Treat your investment as a business and focus on providing a quality product to your clients/tenants. Most importantly I’d encourage any investor, amateur or professional, to speak to a broker who understands the market and has great relationships with specialist lenders. Finally, what plans does OneSavings Bank have for the future? What can we expect from you in 2020 and beyond? To be the UK’s leading specialist intermediary only lender. Thank you to Adrian for taking part in this edition’s Lender in the Spotlight. If you would like any more information on any of One Savings Bank’s lenders or their products, call our Advisers on 0345 345 67 88.
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13
BUY TO LET CASE STUDY BUY TO LET | SETTING UP ANSUMMER SPV LIMITED 2018COMPANY
Setting up an SPV Limited Company Buy to let lenders who offer mortgages to limited companies usually require the limited company to be an SPV (Special Purpose Vehicle). Jeni explains what one is and how to get one. In the mortgage world, a Special Purpose Vehicle limited company is a company which is set up just to hold property and do nothing else. Buy to let lenders offering mortgages to corporate vehicles mostly prefer SPVs to trading limited companies because they are easier and quicker to understand and underwrite, and are perceived as being lower risk. Many more landlords are now purchasing rental property via an SPV limited company because it can be more tax efficient now that the changes to tax relief on finance costs for individual landlords have been phased in. According to the results from our latest Buy to Let Mortgage Index (Q3 2019), 63% of all buy to let mortgages are now available to limited companies, which is up a signficant 30% from Q2 2019. As you can imagine, we now frequently get asked how one goes about setting up an SPV. The honest answer is that it is very simple and is no different to setting up any other company. You can either ask your accountant or simply go to the Companies House website and set the company up yourself. An SPV limited company costs £12 to set up, and if done online, it will take just a few minutes to arrange. As long as you intend to use the company just for property letting going forward, the sole use for an SPV, there is nothing more complicated to it! For those who already have companies and are wondering whether they would meet the SPV criteria, here is what the lenders like to see: • SIC code for letting property • No sign of any revenue through the company of anything other than letting property If the company has traded in another field in the past, some of the lenders will still lend to the company as long as this is historic, the company has the right SIC code and the accountant can confirm the company will only be letting property going forward. What is a SIC code? The Standard Industrial Classification of Economic Activities (SIC) is used to classify business establishments by the type of economic activity in which they are engaged. How do you get a SIC code? You will need a SIC code when filing the SPV’s Annual Return with Companies House. To choose a SIC code, use the official Condensed SIC list on the Gov.uk website. Most investors require a SIC code from Section L: Real estate activities. Buy to let mortgages for non-SPV limited companies If your company trades in something other than property you can still get a buy to let mortgage; however, your options are restricted to fewer specialist lenders. Our website has a list of the latest buy to let mortgage products available to SPVs. You’ll find a wide choice from trackers to five year fixed rates and you can send yourself a quote or get in touch to talk through the options.
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www.mortgagesforbusiness.co.uk
Q3 2019
BUY TO LET CASE STUDY BUY TO LET | AUTUMN AND WINTER REPORTS 2019
Autumn and Winter Reports 2019
AUTUMN REPORT 2019
AVERAGE PROPERTY PRICE
AVERAGE FIRST TIME BUYER PURCHASE PRICE
AVERAGE HOME MOVER PURCHASE PRICE
£234,853
£196,921
£273,680
AVERAGE FIRST TIME BUYER ADVANCE
AVERAGE HOME MOVERS ADVANCE
AVERAGE RE-MORTGAGE ADVANCE
£175,361
£232,653
£175,974
Full Time Landlord Expands Buy to Let Portfolio in South Yorkshire The Client: An experienced, full-time landlord with 3+ properties in her growing portfolio. The Property: A 2-bedroom terraced property in close proximity to a town centre and railway station in South Yorkshire. The client had bought it in an un-lettable state to refurbish and let out. The Finance: The client, having completed the refurbishment, wanted to pay off the bridging loan taken out at purchase to reimburse her costs and to raise some capital to purchase further buy to let properties for her portfolio. The Application: The client had financed a number months, so we knew her well and had all the required documentation. She had refurbished the property to a good standard and the lender was happy with the value and rental assessment, requiring no additional checks. As with her previous investments, everything went quickly from offer to completion, resulting in another very happy client.
FirstRate
of other properties with us over the past 18 Property value
£80,000
Loan amount
£60,000
Rate
2.89% 2 year fixed
LTV
75%
Term
25 years interest-only
Mortgage payment
£146 pcm
Predicted rental income
£500 pcm
Lender arrangement fee
1%
Gross yield
7.5%
Adviser
Andy McOwat 01625 416396
Call 0345 345 6788
15
HMO | SCOTTISH HMO Mortgages
All Change for HMO Mortgages in Scotland Until recently, getting a competitive HMO mortgage in Scotland was difficult as very few lenders offered them. Last week, two major lenders who specialise in HMO mortgages opened their criteria up to Scottish properties! Consultant broker, Luke Worrell, explains what they’re offering… Why the change? HMOs are popular with landlords, due to their potential for higher yields compared to vanilla buy to lets. Plus, with several popular universities in Scotland, the student demand for these types of properties is just as high as in the rest of the UK. Until last week, if you wanted a mortgage for an HMO property in Scotland, you had a choice of just a handful of lenders. While one of these had a generous maximum bedroom limit, none offered particularly competitive rates compared to those available for properties in England and Wales. Now that 2 of the largest providers of HMO mortgages accept applications for Scottish properties and offer competitive rates and decent upper bedroom limits, it is good news for landlords investing north of the English border! Who are these new HMO mortgages available to? Both these lenders accept applications from individuals and SPV limited companies, who are either purchasing or remortgaging HMO property. While one accepts a maximum of 6 bedrooms, which is pretty standard for HMO lenders, the other has a slightly more generous maximum of 8! While one lender doesn’t require a minimum income, the other asks for at least £30,000, which can be split between multiple applicants and come from a mix of rental and salaried/self-employed income. They also both insist on between 1-2 years buy to let property experience, although not necessarily with HMO properties. What mortgage rates are they offering? With a 75% loan to value (LTV), the 2-year fixed rates start from 2.79% and 2.99%, with a 0.5% and 1% product fee respectively*. If you’re looking for a longer, 5-year fix at 75% LTV, rates start from 3.19% and 3.39%, with a 2% and 1% product fee respectively*. These rates are available to both individual and SPV limited company investors. *Rates as at 20/11/2019
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www.mortgagesforbusiness.co.uk
Q3 2019
COMMERCIAL | CASE STUDIES
Alternative Development Finance Solution for Unmortgageable Petrol Station The Client: An experienced businessman who owned and ran a petrol station in the south of England. The Property: The client owned the freehold for the business, as well as his own home for which he had a £414,000 mortgage. Both of these properties held a good amount of equity in them. The Finance: The client needed to release equity to pay for some minor refurbishments to the business’ property and to make general updates to the retail unit within, to ensure it remained a popular stop for customers. He wanted to release equity from the business property through remortgaging. The Challenge: Despite providing evidence of the business’ strong profits the existing High Street bank, who loaned the original commercial mortgage with the business property as security, refused to remortgage the property and release the funds for the works. Many High Street banks are currently reluctant to lend to petrol stations as they are seen as too much of a risk. This left the client in a difficult position as, without the finance, they were unable to grow and develop the business. The Solution: When the client came to us, we were able to approach a more specialist lender with his case. Rather than releasing funds through a remortgage, the lender agreed to grant a loan in the client’s personal name with a second charge over his residential property, but with the understanding that the funds were to be used for the business’ required works to Property value £795,000 strengthen the trading operation. Despite 2nd Charge Business £110,000 being in the client’s personal name, the Loan repayments can be charged back to the trading business. The client was thrilled we Rate 6.49% interest-only were able to source an alternative solution, Lender Arrangement Fee 2.4% added to loan allowing him to receive the finance to make Adviser Peter Barnes 01732 471641 the required changes to the business and develop its future.
Bridging Finance for Luxury £17.5 Million Development The Project: An experienced developer had built a substantial, ultra-modern development in the South of England. Having started the project in 2013, it was ready to sell in early 2018. The Challenge: Despite a huge amount of interest, mainly from foreign investors, the turbulent political situation here in the UK had left the newly built property unsold. The existing high street lender wanted the original development finance loan repaid and the client was reluctant to sell the property undervalue. So, the only option was to find a source of exit finance from another lender. Having approached a number of lenders the client was unable to find a satisfactory deal, as they all required further costs and securities or could not meet all the requirements. The Resolution: The client’s accountant was directed to our commercial team, here at Mortgages for Business, by an estate agent they were working with. Using our industry experience and knowledge, we worked to source lenders who would lend on a single ‘trophy’ asset that was also a new build. In the end, we were able to obtain offers which fitted all the requirements from more than one lender. Once a lender was chosen, we worked closely with the senior underwriter to make sure things moved swiftly, much to the delight of the client and his team.
FirstRate
Property value
£17,500,000
Loan amount
£7,640,000
Rate
0.75% per month
LTV
44%
Term
12 months
Lender arrangement fee
1.25%
Adviser
Andy Elley 01732 471644
Call 0345 345 6788
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COMMERCIAL | UK HOLIDAY MARKET SPECIAL
The Rise of the Holiday Let With the rise of Airbnb, beautiful UK summer weather and plenty of European visitors taking to our shores to reap the advantage of the weakest sterling position in memory, it is no surprise that holiday let mortgages continue to grow in popularity. Commercial Consultant, Andy Elley, explains what the benefits are and the type of investments we’re seeing… My clients have been heavily investing in this sector. The yields available on holiday let properties have rocketed and it is no surprise to see well-maintained properties, in the right locations, producing yields over 10% per annum. Here at MFB, we have seen both first-time holiday let owners and experienced holiday letting companies expanding as a result, taking advantage of numerous interest-only deals in the market place. Since the loan interest tax relief restrictions have come into full force and the impact is being felt by landlords, holiday lets are becoming increasingly more attractive as landlords look for alternative tax-efficient vehicles. From a tax perspective, in order to benefit from the more favourable treatment of loan interest it is necessary for the property to be available to let for at least 210 days in the tax year, and actually let for 105 days. There are many taxable allowance offsets available - for example, council tax, repairs, depreciation of the fixtures and fittings, and loan interest can be offset depending on your circumstances. To find out how this applies to your circumstance, please seek professional tax advice before making any decisions. What types of property are classed as holiday lets? The types of property we have financed vary enormously, even more so as Airbnb has diversified the market both in terms of locations and property types that people are looking for. With the increasing popularity of ‘city breaks’, UK holidays are no longer just people looking for week-long, cottage holidays in the countryside. To give some examples, this year we have written holiday let mortgages for houses large and small, flats and dwellings situated above a commercial property (which are often better value). Alongside the more straight forward investments, there have been some that have covenants which allow only holiday lets in the property. On a larger scale, we 18
have arranged finance on new and existing holiday let complexes. How are holiday lets financed? The majority of the mortgages have been based on projected holiday income, where the lender takes into account potential higher levels of return from the holiday let (instead of standard assured shorthold tenancy income). However, it is worth noting that the majority of applicants who go down this route are of reasonable net worth and have the benefit of strong outside income to strengthen their application. If neither of the above options would work for your property, we also can look at alternative ways of raising capital. For example, using supporting security. This year I arranged commercial mortgages for clients where the lender takes a ‘first charge’ over the holiday let property and a ‘second legal charge’ over their primary residence or other security (e.g. properties which have plenty of equity). Using this scenario as our basis for a credit application, we can fund 100% of the purchase price of a holiday let. However, the client must be able to facilitate the costs of purchase (for example, legal and stamp duty costs) and the projected holiday letting income has to be able to service the mortgage in line with the lenders stress tests. A recent conversation with one of our major holiday let lenders revealed that MFB place substantial holiday let business with them, more than any other broker in the UK. We have years of experience and knowledgeable commercial mortgage consultants who are particularly adept at piecing a deal together. Because of our expertise and dedication to the sector, we have been able to position ourselves as industry experts in holiday let mortgages. Our
www.mortgagesforbusiness.co.uk
Q3 2019
COMMERCIAL | UK HOLIDAY MARKET SPECIAL advisers know who is lending, providing our clients with peace of mind that we will fund their dream project, saving them time and money in the search. We now have over 18 lenders offering holiday let mortgages, which between them offer: • • • •
Up to a maximum of 75% loan to value (LTV) Rates from 1.99% on a two year fixed rate, through to 2.99% for a five year fixed rate Loans to individuals, SPV limited companies or trading limited companies Arrangement fees, some of which are free
Because several lenders consider applications from SPV and Trading Limited Companies, it often throws up the question, what entity should I borrow in? Should I borrow as a sole trader, a partnership, a Limited Company or a Limited Liability Partnership (LLP)? I am afraid one answer doesn’t fit all and every case is different. As I mentioned earlier, you will need to take professional tax advice to find the best solution for you. We have lenders who will lend to all of these categories and are here to advise you whichever route that you choose to go down.
What you need to know about Investing in Hotels and B&Bs With 20 years of experience sourcing property finance for businesses in the leisure sector, Head of Commercial, Andy Elley, knows a thing or two about investing in B&Bs and hotels. In this blog, he explains what you need to know about investing in B&Bs and hotels and what to expect… Why Invest in Hotels and B&Bs? Tourism is a huge industry in the UK, worth £127 billion to the economy annually (Visit Britain). British tourism has benefited from visitors from outside of the UK making the most of the weaker sterling, courtesy of the political and economic turmoil that Brexit has caused! However, according to industry research, it’s the hotter British summers that have been making the most difference. Reports from Travel Weekly suggest that the more favourable weather has contributed to a 55% increase in domestic tourism since 2017, with many of us now opting for “staycations” rather than travelling abroad for our sunshine. This level of industry growth has naturally increased the demand on holiday properties, whether hotels or B&Bs and everything in between. London hotels alone are set to increase room numbers by over 10,500 in the two years to the end of 2019 (Knight Frank), and the latest Accommodation Occupancy report from Visit Britain, highlighted that “establishments with 1-25 rooms saw the greatest increase in room occupancy,
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COMMERCIAL | UK HOLIDAY MARKET SPECIAL up +2% at 81%”. So it seems that whatever the establishment size, now is as good a time as ever to invest in the holiday accommodation sector. Find the Right Property The first thing you need to consider is what type of property you are going to invest in. Generally, lenders consider anything with below 10 bedrooms as a B&B or guesthouse, and anything over 10 bedrooms as a hotel. To maximise profits, choosing the right property in the right location is vital. Think about the type of audience you’ll be marketing to; families, couples, beach holidays, walkers, city breakers? Where are the UK’s most popular destinations already for these types of holidays? What amenities does the property have nearby? In my experience, it’s best to avoid places where a brand-new budget hotel chain has been built, but you’ll also need to think about other types of competition and the standards these properties offer holidaymakers. Knowing the area does help but isn’t vital. If you’re purchasing an existing holiday business, review the business’ financial accounts for the last two years and, if it’s VAT registered, be sure to request the past years’ worth of VAT returns to check the business’ turnover has been consistent. Don’t be afraid to ask the sellers why they’re selling; if it’s because demand has dropped off in that area then perhaps this isn’t the right investment for you. My best advice would be to look at as many properties/premises as possible and keep profitability in mind. Ultimately, even if it’s the most wonderful building, if it’s not in the right location it’s going to be difficult to turn a decent profit which is your main aim as a business owner. Property Management Consider how much “hands-on” management you want your property to require. Hotels are always going to need more, as generally staff are required 24-7, however, the profit margins are usually higher with this type of investment. B&Bs on the other hand, don’t need quite so much management. however, you will need to consider whether you will be living on-site and managing everything yourself. Financing Your Holiday Accommodation Investment For most hotels and B&Bs, mortgage terms are between 15 and 25 years, with options including interest only or capital and interest repayments.
Bed and Breakfast Mortgages For a bed and breakfast mortgage, you will generally require a 50% deposit to secure a mortgage, although, if at least one applicant for the mortgage retains a strong outside income, we do have access to lenders that would consider up to 70% loan to value (LTV). Hotel Mortgages For a hotel mortgage, where you’re looking at potentially higher profit generation, maximum borrowing will be around 70% LTV. Interest Rates Interest rates for either start from 2.50% over base rate* with lender arrangement fees usually from 1.5% to 2%. These rates are considerably better than before the 2008 crash, where you could expect rates from 7.50% for most commercial mortgages! What Experience Do I Need? In the B&B and hotel sectors, lenders tend to prefer applicants with experience in the industry, however, we do have access to lenders that will consider newcomers. In these instances, a clear business plan and financial projections are vital to make a case to the lender. If this is your first investment in the industry, it’s worth talking to an experienced broker as they will know which lenders are open to you and can help put your case across to them. When should I invest? If holiday accommodation is an investment you’re considering, now is the time to start looking. As the main “season” ended in September, businesses looking to sell will be coming onto the market now so that the new owners can be ready for guests again in the spring.
*Base Rate 0.75% as at 07/12/2019
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www.mortgagesforbusiness.co.uk
Q3 2019
RESIDENTIAL | CASE STUDIES
Captial Raise Remortgage For Couple With Bonus Based Income The Client: A young employed couple looking to remortgage their property for the first time, following the expiry of their initial 2 year fixed rate product. The Property: A 3 bedroom Victorian property, in a popular commuter town in Kent. The property benefits from being close to a train station and fantastic local amenities. The Finance: The couple asked for our assistance as they wanted to remortgage and borrow additional funds, to allow them to carry out refurbishments. Their existing mortgage lender had only offered them extra funds on higher rate product. The couple were keen to have a look at a variety of different lenders to get a highly competitive rate on the total amount borrowed. The Challenge: We knew that this was going to be a difficult case due to one of the applicant’s complicated income stream, which was partly based on bonuses and incentives. The Solution: In this case we needed a lender who would consider the bonus nature of the applicant’s income as part of their affordability calculation. Before submitting any applications, we spoke to several lenders that would be interested in lending to the couple, to find the best rate for them. After finding one that matched all the requirements, we made sure to get a final confirmation that the lender was happy to proceed before submitting a formal Property value £240,000 application. Loan amount
£194,00
Rate
2.04% 5 year fixed rate
LTV
81%
Term
28 years
Mortgage payment
£762 pcm
Lender arrangement fee
£999
Adviser
Ashley Jones 01732 471694
Once the lender received all the documentation, the valuation report was instructed on the same day and the offer was issued within seven working days.
Penthouse Purchase for Previously Bankrupt Couple The Clients: A couple who were directors of their own limited company. Neither had owned property for several years and were looking to purchase their first home together. The Property: A 3-bedroom penthouse flat in a converted industrial building, situated conveniently close to the couple’s business and in a prime London commuter belt area. The Finance: The couple had a decent 42% deposit to put on this property but required a mortgage to complete the purchase. The Challenge: Unfortunately for the clients they had been declared bankrupt in 2012, something that would often put lenders off. To overcome this, we would have to prove to the lender that the couple were now not a risk and would be able to keep up with mortgage repayments. The Solution: Since the bankruptcy, the couple had worked hard to rebuild their credit profile by keeping up with small finance agreements. Armed with this evidence, and the larger than average deposit they had managed to save, we were able to present it to several lenders as evidence that the clients were no longer a financial risk. Property value
£405,000
Loan amount
£233,084
Rate
1.71% 5 year fixed rate
LTV
58%
Term
10 years
Mortgage payment
£2,077 pcm
Lender arrangement fee
£995
Adviser
Ashley Jones 01732 471694
FirstRate
Call 0345 345 6788
All the final lender required in addition to the usual documentation was an accountant’s reference for the couple’s company, which secured the well-priced mortgage.
21
BUY TO LET CASE STUDY RESIDENTIAL | SELF EMPLOYED MORTGAGES
Self Employed Mortgages – Dispelling the Myths & Legends There’s a big misconception that getting a mortgage when you’re self employed is difficult, if not impossible. Experienced consultant, Erin Gallacher, explains why this isn’t the case, what you need to make an application and what to expect... Self Employed Mortgages – How Have They Changed? Before the 2007 financial crash, those who were self employed could apply for a ‘self-certification’ mortgage. The applicant could say to the lender, “I earn X amount” and not have to prove it. Post-crash, a lot of regulation came in to protect both the lender and the borrower, so these types of mortgages are no longer allowed. One of the main changes for self employed applicants is proving your income, so the lender can be confident you can make the repayments. To do this, you need a bit more paperwork than those who are employed. What You Need: At A Glance • An accountant • Two years of accounts* • Proof of regular work • Good credit history • A deposit *Or tax computations for sole traders who may not have accounts How Many Years of Accounts Do I Need? The majority of lenders will require two years self employed income proof to consider your application. However, we have access to some lenders who only require one year, and some will ask for three. If you have recently become self employed with a company who previously employed you, lenders may be willing to make an exception and waive the requirement of proving two years self employed income as you will have a recent record of being employed. It’s worth talking to a broker about which self employed mortgage lenders are best for your situation.
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How Do Lenders Work Out How Much You Can Borrow? Lenders will typically base their calculations on the average profit you’ve made, as shown in your accounts, or some lenders will use salary and dividends received based on the last two years. While it’s not compulsory to have an accountant (unless you’re a Limited Company), it’s worth keeping in mind that some lenders may require an accountants’ reference or projection of profit, in which instance you will need a qualified accountant. If you want a quick check of what you can expect to be able to borrow, you can use our Residential Mortgage Calculator as a starting guide. Credit Checks As a self employed person, lenders will conduct greater due diligence on your personal credit history and are likely to do softer checks on your business (through Companies House for example). Therefore, having a good credit score for both your personal and business accounts will generally make things easier and give you more options. If you’re worried about how your credit score may affect your application, it’s best to speak to a broker who will be able to assess what’s available to you. Deposits The same goes for everyone; the more deposit you have, the more likely you are to be accepted for a mortgage and, generally, the better the rates available to you. Generally, you will need at least a 10% deposit.
www.mortgagesforbusiness.co.uk
Q3 2019
BUY TO LET CASE STUDY MFB NEWS
New Starters
Chris Unwin Residential Mortgage Consultant 01625 416394
Ross McTaggart Residential Mortgage Consultant 01732 471630
Rhys Jones IT Support Analyst 01732 471643
Les Washington Office Manager 01732 471619
Give Back Children In Need 2019 On Friday 15th November we held a staff fundraising day in which we raised £263.00 for Children In Need. This was matched by the company to total £526!
Silverstone Half Marathon Our residential mortgage advisor Ashley Jones completed a half marathon to raise money for Demelza Hospice. Ashley managed to complete the run in just 1 hour 36 minutes and raised over £300 for charity, well done Ashley!! Ashley Jones, Silverstone Half Marathon
Awards National Landlord Investment Show We were delighted to win our nominated category of ‘Best Buy to Let Mortgage Broker’ amongst strong competition! Thank you to the National Landlord Investment Show team for a brilliant evening and congratulations to all the winners and finalists on the night.
2020 Events Property Investor Show 3rd - 4th April - London 2nd - 3rd October - London National Landlord Investment Show 19th March - London 19th May - Birmingham 11th June - London 8th October - Manchester 3rd November - London
FirstRate
Clive Emson Auctions 10 February - Kent 11 February - Essex 12 February - Sussex
Monday 4 May - Kent Tuesday 5 May - Essex Wednesday 6 May - Sussex
23 March - Essex Tuesday 24 March - Kent Friday 27 March - Sussex
Monday 15 June - Essex Tuesday 16 June - Sussex Friday 19 June - Kent
Call 0345 345 6788
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BUY TO LET MORTGAGE BEST BUYS The rates listed below represent a small percentage of the buy to let mortgages available. We consider them to be best buys not just because of the headline rate, we also take other lending criteria into consideration. Please note that other fees may be payable, although we will always let you know what you can expect to pay up front. If you are unsure, please ask for clarification. For more detailed information on the products shown below and to discuss property finance for your circumstances, please call our customer enquiry line on 0345 345 6788. Please note, calls may be monitored or recorded for training purposes.
BUY TO LET MORTGAGES FOR LTD COMPANIES Rate
LTV
2.94% 2 year fixed
75%
Description Fixed at 2.94% for 2 years reverting to 5.80% (LIBOR + 5%).
Lender Fee 1.5%
APR 5.7%
RTI 125% at 5.50%.
ERCs Yes
Available for purchase and remortgage with a free standard valuation. Low minimum income at £15,000 and option for day one remortgage. Available to Multi-Units, HMOs and Highrise Flats and is for SPV Ltd. Company applicants only. 3.29% 2 year fixed
75%
Fixed at 3.29% for 3 years reverting to 4.49% (SVR)
0.5%
4.4%
125% at 5.50%
Yes
Available for purchase only with a free standard valuation. Accepts Professional Landlords, Foreign Nationals and First Time Landlords. Property criteria includes refurbishment, Ex Local Authority Flats and Houses and Studio Flats. Only available to SPV Ltd Company applicants. 3.19% 5 year fixed
65%
Fixed at 3.19% for 5 years reverting to 5.74% (BBR + 4.99%).
2%
5.2%
125% at 3.19%
Yes
Available for purchase and remortgage. Available to Ltd Company applicants including Expats and Trading Ltd Co’s. Property criteria includes Multi-Units, HMOs and Studio Flats.
BUY TO LET MORTGAGES FOR INDIVIDUALS Rate
LTV
1.54% 3 year fixed
60%
Description Fixed at 1.54% for 3 years reverting to 5.09% (SVR).
Lender Fee £995
APR 4.6%
RTI 125% at 5.50%
ERCs Yes
Available for remortgage only with a free standard valuation. Available to individual applicants only. Property criteria includes HMOs, Eco Homes and Studio Flats and does not require a minimum income. 1.59% 2 year fixed
70%
Fixed at 1.59% for 2 years reverting to 4.99% (SVR + -1.00%).
£1,999
4.8%
140% at 5.50%
Yes
Available for purchase and remortgage and includes a free standard valuation. The product is available to First Time Landlords, Foreign Nationals and is for individual applicants only. 2.32% 5 year fixed
75%
Fixed at 2.32% for 5 years reverting to 4.74% (SVR).
£995
4.1%
145% at 5.50%
Yes
Available for remortgage only with a free standard valuation. Available to First Time Buyers and First Time Landlords and includes Flats over Commercial, Listed Buildings and New Builds.
Rates correct at 12/12/2019 Key: APR: Overall cost for comparison. ERC: Early Repayment Charge. Lender Fee: Fee charged by lender for arranging the loan. Other fees will apply, please ask for details. LTV: Loan to Value. Rate: Initial interest rate period. RTI: Rent to Interest calculation. SVR: Standard Variable Rate.
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE 24
www.mortgagesforbusiness.co.uk
Q3 2019