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Q2 2018 Buy to let mortgages

Commercial mortgages

Property development finance

Bridging & short term finance

Residential mortgages

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Welcome Champions’ League or a Sunday afternoon kick-about? David Whittaker, CEO, 01732 471601

Providing a home for someone you don’t know to live in, is different to the normal process of weighing up risk and reward when choosing investments. Residential property might be the highest performing asset class in recent years, but it is not a sit back and watch your money grow option. All players in the buy to let industry must remember that the customers are actually people requiring shelter. They could be me, you, your parents or your children – from any walk of life. Many have come to you for a home because they are unable to buy one or get one from social housing. I don’t want to be seen to be preaching, only as reminding… Earlier this year, Rosie Keogh from Birmingham, found herself unable to rent a new property when the letting agent realised she was receiving housing benefit and subsequently rejected her application. This decision was made despite the fact that Rosie had been paying her rent in full and on time in the same place for 11 years. Rosie issued a claim for compensation in the county court and after some 18 months of wrangling, the letting agent agreed compensation. Rosie successfully argued that blanket bans on housing benefit claimants indirectly discriminated against women, especially single women, because they are proportionally more likely to be claiming. Although this case did not set a legally binding precedent, it has established that the practice could be considered indirect sexual discrimination. I like to think the landlords who use our services choose tenants on a case by case basis, even if they employ a letting agent to make the decision for them.

But it might surprise you to know that some lenders also say no to tenants on housing benefit. A quick look at our in-house buy to let mortgage sourcing system, Mortgage Flow, tells me that borrowing options are reduced by two-thirds if the tenants classed as such. Despite Ms Keogh’s headline-hitting story, to our knowledge, no lender which excludes these tenants has changed its policy since then. This is shameful, particularly, when one of the industry’s most prominent lenders, Paragon, has publicly stated that when researched, it found absolutely no causal link between mortgage arrears and tenants in receipt of housing benefit. Having said that, this policy is nigh-on impossible to police. Let’s take an example: A single women rents a flat. Her references are good. She has no credit issues and her salary is more than sufficient to cover the rent and her living costs. A few months later, the woman has a baby. Maternity leave, reduces her income such that she is now eligible for housing benefit. She continues to live in the flat and pay her rent on time. How would any lender know that she is receipt of the benefit? How would the landlord know? The woman is paying her rent, it is none of their business. Technically speaking, the landlord could be in breach of his mortgage contract and might not even know it. The whole thing seems ridiculous. I’m not saying landlords have to accept a particular tenant if they are on housing benefit, rather, the decision should be made a on a case by case basis without potentially falling foul of their mortgage contract. Landlords have stepped in where successive


Contents Call: 0345 345 6788 Visit: mortgagesforbusiness.co.uk

Landlords have stepped in where successive governments have failed to provide sufficient housing for a large swathe of the population. Now the government is asking landlords to become more professional, but this niggling little paradox has the potential to make the entire buy to let industry look like a Sunday afternoon kick-about in the park match instead of the Champions’ league final it has the potential to become.

David Whittaker, CEO, 01732 471601

Buy to let is in the spotlight 5 How many BTL mortgages can I have? 6 Newly established SPV Ltd Co receives offer within 10 days 7 Why focusing on the headline rate could be costing you £££s 8 Expat couple raise capital on unencumbered rental property 9 Do your properties meet the new EPC rules? 10 BTL mortgage for couple buying flat on 6th floor of mixed-use block 11 BTL mortgages at a glance 12 - 13 Keystone Property Finance 14 - 15 Lender in the Spotlight 16-17

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Visit: whatmortgage.co.uk/mortgage-awards2018-nominee-shortlists-announced/

Commercial Mortgages

From buy to let to commercial 19 £1m commercial remortgage of holiday complex 20 Unsecured borrowing for business expansion 21 Bridging loan for company directors to develop property 22 3 reasons for landlords & property developers to use short-term finance 23 Mortgage for landlords purchasing first hotel 24 Non-homeowners purchase 14-bed HMO 25 Mortgages for care-homes 26-27

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Did you know?

Residential mortgages

Are you prepared for interest rate hikes? 29 Mortgages for expats 30 Couple save £1,200 pcm remortgaging onto interest only terms 31 Should I overpay my mortgage? 32 Client with missed mortgage payments buys 2nd home 33 How to choose the right mortgage 34

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Buy to Let Mortgages

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BUY TO LET - MEET THE TEAM

Buy to Let Desk

Andy McOwat CeMAP, CertBB&C

01625 416396 andym@

Beckie Pepperrell

Calum ObbardBanham

Chris Longhurst

Gavin Elley

CertBB&C

CeMAP, CertBB&C

CeMAP

CeMAP

01732 471602 beckiep@

01732 471648 calumo@

01732 471607 chrisl@

01625 416398 gavine@

Jeni Browne

Nick Helm

Paul Martins

CeMAP, Adv CeMAP,

ACIB, CeMAP,

CeMAP, CertBB&C

CertBB&C

CertBB&C

01732 471647 jenib@

01732 471608 nickh@

01732 471616 paulm@

@mortgagesforbusiness.co.uk 4

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Q2 2018


BUY TO LET UPDATE

Buy to let is in the spotlight Paul Martins, Head of Buy to Let, 01732 471616

Is buy to let still a healthy market? Paul Martins offers his opinion on how the market has reacted to the rules, regulations and restrictions brough in by the UK Government

In 2017 buy to let lending totalled £35.8bn according to figures published by UK Finance. This year we are expecting total lending to sit at around £32bn. That’s a small decrease but even so, it’s worth pointing out that the market is still performing well and has come a very long way in a short space of time… There is no denying that buy to let has been in the spotlight for quite some time now with the Government throwing more than a few spanners in the works along the way, but I have to say lenders still have good appetites and we are even expecting some new entrants this year.

A recap on rules, regulations and restrictions I think it is important to recap on the three Rs namely rules, regulations and restrictions. They are affecting and will continue to affect landlords going forwards. EPC ratings. In short, no EPC, no buy to let mortgage. Residential landlords are no longer able to grant a tenancy to new or existing tenants if the property’s EPC rating is F or G – this came into effect on 1st April 2018. From 1st April 2020, if there is a tenant already in situ it will become illegal for residential landlords to continue letting the property out if the EPC rating is F or G. Need more information? Visit our website where you can instantly retrieve the EPC rating on your property and watch our latest webinar on the topic. Mandatory HMO licence and minimum room size. Currently, mandatory licensing only applies to HMOs in mandatory licensing areas or where HMOs are at least three storeys high, rented to five or more people who form more than one household, and who share facilities such as toilet, bathroom and kitchen. However, from 1st October 2018 the parameters of mandatory licensing are being extended to include properties with any number of storeys.

on our website. Alternatively give us a call on 0345 345 6788 and we’ll point you in the right direction. Income tax relief restrictions for landlords tax year 2017/18. Historically, landlords could deduct all of their mortgage interest and other finance costs from rental income before calculating tax. But not anymore. April 2017 brought with it a new fiscal regime which is slowly phasing out this tax relief and replacing it with a calculation which means that most landlords will pay more tax. Now, I realise you might not submit your tax return until next January but it is important to understand how you will be affected and what you can do about it. We’ve created a guide which we hope will show you just that. You can download this guide from our website or give us a call and we can send you a copy in the post!

BTL Mortgage Broker of the Year I am delighted to report that Mortgages for Business was awarded Buy to Let Mortgage Broker of the Year for the seventh year in a row at this year’s Business Moneyfacts Awards. The team and I are all extremely proud of the result. Finally, I would like to take this chance to remind you of our FREE property portfolio review service, where we find out if you can save money by switching provider or unlock any untapped equity. Simply send us your property portfolio spreadsheet, or download ours, fill it in and send it back to us. Our spreadsheet has been designed to capture all the property portfolio information lenders will require to assess an application from a “portfolio landlord” – a landlord with four or more mortgaged properties. Remember, we have access to the whole market and are often presented with limited edition rates for our clients, so if you have any property finance requirements do get in touch with us today on 0345 345 6788.

Minimum room sizes for bedrooms are also being introduced, as well as a need for adequate waste and recycling facilities. Again, full details can be found in our recent webinar which you can find

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5


BUY TO LET UPDATE

How many buy to let mortgages can I have? Jeni Browne, Sales Director, 01732 471647

This is one of the most commonly asked questions we get from landlords who are looking to expand their portfolios...

There is no limit The very short answer is, that there is no limit. We have some clients with extremely large property portfolios, who have literally hundreds of buy to let mortgages. However, that’s not the whole story…

Exposure limits Lenders either limit the number of buy to let mortgages you have with them (to say, three) or they limit the total amount of borrowing you can have with them (to say, £5m).

Exposure limits with other lenders However, some lenders will also limit the number of buy to let mortgages you can have with other lenders (often referred to as “in the background”). Again, this can vary, often from 4-10. And there are many lenders who do not mind how many buy to let mortgages you have with other lenders. But it doesn’t end there…

Portfolio Landlords If you are classed as a Portfolio Landlord, i.e. you have four or more buy to let mortgages, lenders are obliged to assess both:

The buy to let mortgage application you are making That could be for a purchase, a like-for-like remortgage or a remortgage and capital raise.

cover all the mortgage interest with a surplus. The way lenders calculate this does vary – some want the whole thing to wash at 125% assuming a rate of 5.5%, some 145% at 5.5% and others use a bespoke calculation. Some lenders will accept your own portfolio spreadsheet, others prefer a particular format – we have devised one which is acceptable to all lenders which you can use.

Call us on 0345 345 6788, request a copy and our team will get the Excel file over to you asap. In addition to this some lenders may ask for a cashflow forecast and/or a business plan – these are nothing to be feared and we are more than happy to help you put these into the correct format.

Non-portfolio Landlords If you have fewer than four mortgaged buy to let properties, lenders will probably ask about your background properties, but they will not form part of their underwriting. And finally, if you own lots of buy to let properties outright, say four, or 10 or 100+ – you will not be classed as a portfolio landlord until four of your properties are mortgaged. As usual, if you want to talk through the current buy to let mortgage options for your circumstances, please do not hesitate to pick up the phone. My direct line is 01732 471647 or you can speak to any of our qualified mortgage advisers on 0345 345 6788. We look forward to helping you.

Your entire portfolio and your total borrowing Lenders prefer the leverage to be below 75% loan to value of the entire portfolio. The rental income from the portfolio needs to

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Q2 2018


BUY TO LET UPDATE

Newly established SPV Ltd Co receives offer within 10 days The Clients: Business partners looking to expand their property portfolio. On the advice of their accountant, the pair had recently set up an SPV limited company through which they would make this and all future purchases. After this purchase, the business partners plan to start the process of selling their personally owned properties to their SPV Ltd Co. The Property: The pair were looking to purchase a two-bed terraced house in Lancashire, valued at £55k. Their modus operandi is to purchase low-value, high-yielding property. The Finance: The majority of buy to let lenders don’t accept property valued below £75k, because of this, finance options were restricted. We approached an intermediary only lender, which we know accepts properties valued from £50k. This lender is also currently offering some extremely competitive five-year fixed rates – the rate type requested by the business partners. We sent the business partners a list of required documentation – including a property portfolio spreadsheet, proof of income and proof of ID. Receiving this information back almost immediately, a valuation was instructed and within 10 days a formal mortgage offer was made.

Value Loan amount LTV Rate Term

£55,000 £41,250 75% 3.49% 5 year fixed 25 years interest only

Lender arrangement fee Mortgage payment Rental income Gross yield Consultant

2% (£825) £122 pcm £450 pcm 9.8% pa Andy McOwat, 01625 416396

Fast remortgage of HMO for portfolio landlord raising capital The Client: An experienced portfolio landlord who owns 10+ rental properties personally. The Property: A licensed HMO in London let to four sharing professionals. The Finance: The client was looking to remortgage to raise capital from the HMO to help his son get into buy to let. He was in a rush to raise the funds, as his son was trying to buy a property where the vendor was looking for a quick sale. The client requested a rate with no early repayment charges (ERCs) which limited the number of products available. The Application Process: We approached a buy to let lender which we knew would be able to turn the application around swiftly and is currently offering rates without ERCs. The lender instructed a valuation of the HMO and within two days of this being undertaken, a formal offer to lend was issued. We then worked quickly with the lender, the client and the solicitors to push the application through and the entire case completed just two weeks later. Here are the details:

Value Loan amount LTV Rate Term

FirstRate

£1,100,000 £458,260 42% 3.34% 2 year tracker 10 years interest only

Lender arrangement fee Mortgage payment Rental income Gross yield Consultant

Call 0345 345 6788

1.5% (£6,873) £1,294 pcm £3,400 pcm 3.7% pa Paul Martins, 01732 471616

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BUY TO LET UPDATE

Why focusing on the headline rate could be costing you £££s Calum Obbard-Banham, 01732 471648 1.39% (5.6% APR)* - This headline rate looks impressive doesn’t it? There’s no denying that for some, this rate would work well. Calum, Consultant Mortgage Broker, explains why a great headline rate doesn’t mean the cheapest rate.

Headline rates are certainly eye-catching and sometimes they are as good as they look but mostly, you’ll find that there is more to the mortgage than meets the eye. You could use the APR to give you an idea of how much the mortgage might cost you but his figure looks at the loan across the entire term and fails to recognise the effect on borrowing costs should you choose to remortgage once the introductory period has expired. And let’s face it, most savvy landlords look to remortgage as soon as introductory period ends because that’s when the Early Repayment Charges expire which means landlords are free to find a better deal. It’s rarely makes sense to remain voluntarily on a lender’s reversion rate. But I digress, the headline rate is not necessarily the cheapest. Let me explain… Example: You are a private investor looking to borrow £180k (60% LTV) on a standard buy to let property valued at £300k which generates rent of £1,200pcm. You’re interested in two-year rates on an interest-only basis. The headline rate above, looks attractive but over the initial two years, is it the cheapest deal? No as the table demonstrates… Rate

Type

Cost over 2 years

1.39% (5.6% APR)*

Fixed

£7,179

1.49% (4.8% APR)**

Tracker

£7,227

1.54% (4.7% APR)***

Fixed

£6,444

Based on the scenario described, the cheapest deal over two years is a different two year fixed rate – in this instance, one from Virgin. If you took the 1.54% 2 year fixed instead of the 1.39% 2 year fixed, you would actually make an overall saving of £735 – equivalent to a weekend away! In this case it’s because the 1.54% product comes with a lower arrangement fee and an extra £250 cash back. Of course, choosing a product is not all about cost. Lenders and

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lending criteria play an enormous role, as do credit checks and turnaround times. And remember tracker rates can go up, whereas fixed rates give you protection against rate rises.

Let us compare rates for you We can compare rates very quickly using our in-house buy to let sourcing system, so if you want to know which is the most suitable and/or cheapest rate for your circumstances, get in touch and we’ll find the best options for you. Remember, we have access to the whole market! We also offer a free property portfolio review service. Simply send us your property portfolio spreadsheet (or use ours) and we will tell you if we can make you a saving by switching any of your mortgages! That’s all you need to do! I work on the buy to let desk here at Mortgages for Business, but this also applies to those looking to refinance or purchase a home. Instead of taking the cheapest rate from your high street bank, why not give us a call first on 0345 345 6788 to make sure it really is the best rate for you! We can even help you to switch products with your existing lender – this is often the most cost-effective route for both landlords and home-owners. SMALL PRINT (RATES CORRECT AT:06.03.2018) *1.39% 2 Year Fixed Fixed at 1.39% for 2 years (until 31/5/2020) reverting to Lenders Standard Variable Rate(currently 4.84%, variable). Purchase applications only. Early Repayment Charge: 2% of the amount being repaid by 31/05/2019, then 1% until 31/05/2020. Overall Cost for Comparison: 4.6% APR. Loan to Value: 60% loan to value to £500,000. Lender Arrangement Fee: £1,995. Broker Fee: Our standard broker fee is due on receipt of an Agreement in Principle from the lender, charged at £497 for personal applications and £597 for applications made by limited companies. We will keep any commission payments made by the lender. Alternatively, we will rebate to you any commission paid by the lender to us and charge you a broker fee of typically 1% of the total loan amount (exact percentage will depend upon the size and complexity of the mortgage application). Repayment Options: Interest only or repayment. Rent to Interest Cover: 145% @ 5.50%. **1.49% 2 Year Tracker Fixed at 1.49% for 2 years reverting to Lenders Standard Variable Rate + 4.50% (currently 5.00%, variable). Remortgage applications only. Early Repayment Charge: 2% of the amount being repaid for the first year, then 1% until the end of year 2. Overall Cost for Comparison: 4.8% APR. Loan to Value: 60% loan to value to £350,000. Lender Arrangement Fee: £1,999. Broker Fee: Our standard broker fee is due on receipt of an Agreement in Principle from the lender, charged at £497 for personal applications and £597 for applications made by limited companies. We will keep any commission payments made by the lender. Alternatively, we will rebate to you any commission paid by the lender to us and charge you a broker fee of typically 1% of the total loan amount (exact percentage will depend upon the size and complexity of the mortgage application). Repayment Options: Interest only or repayment. Rent to Interest Cover: 145% @ 5.50%. ***1.54% 2 Year Fixed Fixed at 1.54% for 2 years reverting to Lenders Standard Variable Rate(currently 4.99%, variable). Purchase & Remortgage applications. Early Repayment Charge: 1.5% of outstanding loan amount until 01/06/2020. Overall Cost for Comparison: 4.7% APR. Loan to Value: 60% loan to value to £1,000,000. Lender Arrangement Fee: £995. Broker Fee: Our standard broker fee is due on receipt of an Agreement in Principle from the lender, charged at £497 for personal applications and £597 for applications made by limited companies. We will keep any commission payments made by the lender. Alternatively, we will rebate to you any commission paid by the lender to us and charge you a broker fee of typically 1% of the total loan amount (exact percentage will depend upon the size and complexity of the mortgage application). Repayment Options: Interest only or repayment. Rent to Interest Cover: 145% @ 5.50%.

www.mortgagesforbusiness.co.uk

Q2 2018


BUY TO LET UPDATE

Expat couple raise capital on unencumbered rental property The Clients: A married couple who live and work in Gibraltar for up to six months a year. They also own two rental properties in Kent, one unencumbered and one with a buy to let mortgage. The couple approached us for help in raising finance against the property they own outright so that they could make repairs to the other rental property and expand their portfolio. The Property: A typical 1930’s 3-bed semi-detached house in North Kent close to all amenities, let to a family for £1,450 pcm. The Finance: The couple were looking to raise £100,000 – just 24% of the value of the house. Despite the relatively small loan amount, we knew this could prove tricky to place as we’d have to find a lender that would accept the couple’s peripatetic, expat lifestyle! On the advice of their accountant, the couple want to raise the capital personally. The Solution: We approached a buy to let lender which accepts expats borrowing personally and does not insist that applicants work for multi-national organisations. Double-checking the lender’s criteria confirmed to us that our clients stood a good chance of being offered the finance they needed so we worked with them to collate the documents that would be required in support of their mortgage application:

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Proof of identity, addresses and income (in both the UK and Gibraltar) Bank and credit card statements

This done, we submitted the application and a formal mortgage offer was issued a few weeks later. We are now working with all parties to ensure that the mortgage completes within the next few weeks. Here are the details:

Value Loan amount LTV Rate Term

£425,000 £100,000 24% 3.94% 2 year fixed 12 years interest only

Lender arrangement fee Mortgage payment Rental income Gross yield Consultant

1.5% (£1,500) £329 pcm £1,450 pcm 4.1% pa Chris Longhurst, 01732 471607

BTL product transfer completes within 24 hours saving portfolio landlord £100 pcm The Client: A portfolio landlord from Scotland approached us looking to refinance one of his four rental properties. As well managing his property portfolio, the client works on a selfemployed basis within the healthcare industry. The Property: A 2-bed, semi-detached house on the outskirts of Edinburgh. The Finance: His initial term with BM Solutions was coming to an end, so he was looking to refinance before reverting onto the standard variable rate (SVR). Unaware that BM Solutions provides a speedy product transfer service, the client was delighted when we suggested this as an option. This transfer service is only available via registered intermediaries. Highlights include no underwriting, no lender arrangement fee and no valuation fee when switching to another BM Solutions product. The Application Process: After considering the various options, the client selected a 2-year fixed rate. Within a few hours the client supplied us with a signed declaration document, which we then sent off to BM Solutions for processing. Within 24 hours the transfer process completed, saving the client £100pcm.

Value Loan amount LTV Rate Term

Firstrate

£130,000 £97,500 75% 3.59% 2 year fixed 12 years interest only

Lender arrangement fee Mortgage payment Rental income Gross yield Consultant

Call 0345 345 6788

Nil £290 pcm £600 pcm 5.5% pa Calum Obbard-Banham, 01732 471648

9


BUY TO LET UPDATE

Landlords? Do your properties meet the new EPC rules? Chris Longhurst, 01732 471607 New legislation puts the onus on landlords to ensure their properties meet minimum standards of energy performance... Government research has shown that the Private Rented Sector has a disproportionate share of the UK’s least energy-efficient properties and fuel-poor households. To address this issue, rental properties in England and Wales must now have an Energy Performance Certificate rating of E or above before a tenancy can be granted to new or existing tenants. This rule will also effect landlords’ ability to get a buy to let mortgage. Further from April 2020 all domestic rented properties must be at least E-rated even if the tenancy agreement has not changed. From April 2023 for all non-domestic rented properties will also

have to meet this standard even if the tenancy agreement has not changed. Our IT team has been making use of the national EPC register and created some whizz bang app to save landlords time, which links the latest EPC report to the relevant buy to let mortgage application. The good news is that the majority of these appear to be passing muster but where they don’t we can at least alert the applicant to the situation and point them in the right direction to rectify the situation. We have developed a free tool to help you retrieve a copy of each of your EPCs. Visit the homepage of mortgagesforbusiness.co.uk.

Asset-rich, cash-poor Edinburgh landlord remortgages 6-bed HMO The Client: An Edinburgh-based, full-time landlord who owns approximately 20 buy to let properties in Scotland. He approached us for help in remortgaging one which he owns personally as the Early Repayment Charges were about to expire and he wanted to raise some capital to use to add value to his portfolio. The Property: A licensed, 6-bed HMO in Edinburgh let to students on one AST agreement which generates £3,600 pcm in rent. The Finance: The client wanted to remortgage up to 75% of the property’s current value. Whilst this is a common procedure, the fact that the property is an HMO and situated in Scotland meant that we would have to seek finance from a specialist lender. Added to this, the client’s outgoings exceeded what he earned on paper, so we needed a lender which would take his High Net Worth status into account when calculating affordability. (The client had previously worked as a qualified accountant before taking up property investment full-time). The Solution: We took the deal to one of the challenger banks which regularly lends on these more complex scenarios and accepts HMOs in Scotland. To them, the case was relatively straightforward because we were careful to ensure that all the supporting documentation was present and correct when submitting the application. A formal mortgage offer was issued within a week of application and the mortgage completed five weeks later. Here are the details:

Value Loan amount LTV Rate Term

10

£530,000 £399,500 75% 4.99% 5 year fixed 10 years interest only

Lender arrangement fee Mortgage payment Rental income Gross yield Consultant

Call 0345 345 6788

1% (£3,995) £1,659 pcm £3,600 pcm 8.2% pa Erin Gallacher, 01625 416392

FirstRate


BUY TO LET UPDATE

Don’t miss out! A Guide to Income Tax Relief Restrictions for Landlords Historically, residential landlords could deduct all of their mortgage interest and other finance costs from rental income before calculating tax. But not any more. April 2017 brought with it a new fiscal regime which is slowly phasing out this tax relief and replacing it with a calculation which means that most landlords will pay more income tax...

Visit: mortgagesforbusiness.co.uk Call: 0345 345 6788

for your FREE guide

BTL mortgage for couple buying flat on 6th floor of mixed-use block The Clients: A married couple both of whom hold senior positions in the medical industry. The have two children and own two rental properties in Liverpool where they live. They were looking to add to their portfolio which they hold in an SPV Ltd company. The Property: A 6th floor flat in a seven-storey, mixed-use block built in 2009. On the ground floor there is a furniture shop. The Finance: They had a deposit of £56,000 and needed a mortgage at 60% loan to value to make the purchase. We knew immediately that the finance options would be limited because some lenders won’t accept flats in:

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Blocks of more than five storeys Blocks with a commercial element A mixed-use block where the commercial element is on their exclusion list, i.e. fast food take-aways

The couple requested a five-year fixed rate as they are currently well-priced and it would protect them against future interest rate rises. They also wanted capital and interest repayment terms so that they will own the flat outright when the mortgage ends. The Application Process: We approached a buy to let lender which we knew would be most likely to accept the scenario. As expected the lender issued an agreement in principle, so we submitted a full mortgage application with supporting documentation on behalf of the couple. A property valuation was duly instructed and the ensuing report confirmed that the flat and its location fell within the lender’s criteria. We then worked with all parties to ensure the application was processed smoothly and on time. Here are the details of the completed deal.

Value Loan amount LTV Rate Term

Q2 2018

£140,000 £84,000 60% 3.29% 5 year fixed 15 years C&I

Lender arrangement fee Mortgage payment Rental income Gross yield Consultant

www.mortgagesforbusiness.co.uk

2% (£1,680) £592 pcm £795 pcm 7% pa Gavin Elley, 01625 416398

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BUY TO LET MORTGAGE RESEARCH DATA

Buy to let mortgages at a glance Total BTL Mortgage Lending (£bn) Total BTL Mortgage Lending (£bn)

50 45 40

£44.6 £35.8

35

£37.5

30

(£bn)

Buy to let lending past present and future

25

£27.2

£32.3

15 £14.2

10

£16.4

£20.0

£20.7

0 2008

2009

Predictions have been provided by David Whittaker, CEO at Mortgages for Business.

2010

2011 2012 2013 2014 2015 Ltd Co Lending Total BTL Lending

2016

£3.5

£6

£8

2017

2018

2019

Q1 2018 Key Facts 1,357 Average No. BTL mortgage products January 2018

Total BTL lending data has been provided by UK Finance.

£28

£10.4

£8.5 2007

£26.0

£27.4

20

5

£32

£40.6

37 Lenders currently

1,498

operating in the buy to let market

1,542

Average No. Average No. BTL mortgage products BTL mortgage products February 2018 March 2018

25% 75%

45% of buy to let mortgage products are below 75% LTV

Pricing falls for limited company applicants during Q1 2018 Products

Limited Company No.

Entire Market

Av. Cost

No.

Av. Cost

Products available to Ltd Co’s Products available to individuals

57%

43%

Lenders with Ltd Co products

Variable

111

4.4%

â

285

3.3%

â

2 Year Fixed 108

3.8%

â

480

2.8%

ßà

3 Year Fixed 38

3.9%

â

196

3.1%

ßà

5 Year Fixed 110

4.3%

á

475

3.4%

ßà

Total

4.1%

â

1,445

3.2%

ßà

368

N.B. Total row includes 1 year and 10 year rates.

Lenders with no Ltd Co products

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Call 0345 345 6788

FirstRate


BUY TO LET MORTGAGE RESEARCH DATA

AverageGross gross rental Average Rentalyields Yields

In Q1 2018...

15.0%

61% Of vanilla BTL

13.0%

transactions were remortgages

11.0% 9.0%

60% Of HMO

7.0% 5.0% 3.0%

transactions were remortgages Q4 2015Q1 2016Q2 2016Q3 2016Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Vanilla BTL

HMO

Multi-unit Freehold Blocks

Semi Commercial Property

75%

of multi-unit transactions were remortgages

Lender Arrangement Fees on BTL Mortgages Fee Type

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Fee-free

11%

14%

16%

19%

% based

48%

44%

42%

42%

Flat

41%

42%

42%

39%

Av. flat

£1,446

£1,370

£1,423

£1,441

47% 53%

Ltd Co BTL mortgages completed Individual BTL mortgages completed

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KEYSTONE PROPERTY FINANCE

Buy to let mortgages with no upper age limits... Many buy to let mortgage lenders impose a maximum age restriction of 75 years on maturity of the loan… fine if you’re happy to sell up when you reach this age, but what if you’re not? You may be interested to know that our lending brand Keystone Property Finance has a solutions for landlords borrowing either personally or via a limited company.

Limited company applicants: Keystone does not impose any maximum age restriction for directors of limited companies (trading or SPVs) and will offer terms up to 25 years! There is only one other lender in the market which can currently match this. The majority of lenders will cap the maximum age for company directors at somewhere between 70 and 80 years. So, if age is a factor and you aren’t already operating via a limited company perhaps it’s time to consider making the switch. Corporate structures aren’t for everyone and we recommend that you take professional advice from your accountant first.

Borrowing personally: If you’ve decided that borrowing in your personal name is still the best option for you, then fear not, Keystone will accept individual applicants up to 85 years at the end of the loan term, although it is worth bearing in mind that you will have to apply by your 80th birthday. On a more positive point, if you are applying as part of joint application and the second applicant is younger than you, their age can be used to extend the loan term.

For example:

ü Same pricing for SPVs, trading Ltd Co’s and individual applicants ü First-time landlords ü Retired applicants ü Ex-pats via SPVs ü No minimum income ü No maximum age limit for Ltd Co directors ü Ex council houses

If you are approaching 80 and apply for a mortgage in your personal name the maximum term you will get with Keystone is five years (taking you to your 85th birthday).

ü Multi-units up to 10 flats

If however, you are approaching 80 and apply for a mortgage in your personal name with another applicant who is 60 – you could get a 25 year term (taking the second applicant to their 85th birthday and you to your 105th!)

ü HMOs/multi-lets up to 8 beds

Keystone is one of the few lenders which offers the same pricing to both individuals and limited companies, so if any of this sounds of interest to you, do get in touch.

ü Remortgages within 6 months

CALL TODAY: 0345 345 6788

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Q2 2018


KEYSTONE PROPERTY FINANCE Portfolio landlords borrowing via SPV raise capital against 6-bed HMO The Clients: Two brothers with a joint portfolio of over 15 rental properties – all held within their SPV Ltd Co. As well as managing their property portfolio, both applicants are self-employed working within the legal sector. The brothers were looking to raise capital against one of their rental properties. They planned to use the capital raised to make a further buy to let purchase. The Property: The property the brothers were looking to raise finance against is a six-bed HMO currently let to students. A sought-after location, the licensed HMO is just a 10-minute drive from Liverpool city centre. The Finance: The brothers were looking to raise £224,000 against the property, which meant borrowing at 75% loan to value. The brothers had also requested a five-year fixed rate, which would protect them from any interest rate rises in the near future. The Application Process: We decided to approach Keystone Property Finance with the case for the following reasons: Portfolio landlords accepted. Keystone accepts portfolio landlords and has no limit on the number of buy to let mortgage an applicant can hold with other lenders. Same pricing for individuals and Ltd Co’s. All of Keystone’s rates are priced the same whether borrowing is made personally, via an SPV or via a trading limited company. Students accepted as tenants. Only a third of buy to let lenders have mortgages for SPVs letting out to students. HMOs up to 8-beds. Less than half of buy to let lenders lend on HMO property. The case is due to complete shortly.

Value Loan amount LTV Rate Term

£280,000 £224,000 75% 4.19% 5 year fixed 25 years interest only

Lender arrangement fee Mortgage payment Rental income Gross yield Consultant

2% (£4,480) £782 pcm £2,800 pcm 12% pa Jeni Browne, 01732 471647

21 year old landlord remortgages rental flat to raise capital The Client: 21-year-old landlord approached us looking to remortgage her buy to let property which had originally been given to her as a gift by her mother as part of an inheritance and tax planning strategy. The client works for a high-street bank and is a basic rate tax-payer. The Property: A three-bed flat within a terraced house. Previously the flat had just two bedrooms but the client had recently created a third by dividing the largest bedroom. The Finance: The client wanted to buy another rental property, by raising capital for a deposit against the flat, which she owned outright. The Application Process: We knew that, due to the client’s relatively young age and lack of buy to let experience, we would have to approach a specialist lender which can only be accessed via intermediaries. The lender we had in mind, requires borrowers to be at least 21 rather than 25 which is the minimum age requirement from many other providers. Even though this lender has a manual underwriting process, we were able to get the client a formal mortgage offer within two weeks of submitting the application. The entire deal completed within six weeks from start to finish. Here are the details:

Value Loan amount LTV Rate Term

FirstRate

£320,000 £240,000 75% 3.99% 5 year fixed 25 years interest only

Lender arrangement fee Mortgage payment Rental income Gross yield Consultant

Call 0345 345 6788

2% (£4,800) £798 pcm £1,300 pcm 4.8% pa Nick Helm, 01732 471608

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LENDER IN THE SPOTLIGHT

Name: John Andrew Heron Position: Managing Director Mortgages Lender: Paragon Bank Hobbies: Skiing is still my real passion. I also enjoy food, wine and cooking for family and friends on high days and holidays. This Easter it was a slow roast lamb shoulder with pomegranate molasses. Still very keen on tennis but a torn meniscus has slowed me down this year! Ideal dinner party guests: I get the greatest enjoyment out of a long Sunday lunch with family and friends

Tell us about Paragon’s Portfolio products? Paragon is the longest established lender in the buy to let market having launched its first specialist mortgage products for landlords in 1995. Since then, we’ve developed a strong bias towards working with portfolio landlords and developed a wide range of products and criteria that are well-aligned with the needs of our target segment. Critical to the proposition is our ability to work with landlords with large portfolios, including those operating within incorporated structures. We also have unparalleled lending expertise on complex property types, like multi-unit blocks and HMOs. And the Non-portfolio products? As a specialist lender, there’s less opportunity for us to differentiate our proposition in the non-portfolio segment of the market. However, we do offer a wide range of fixed rate products for non-portfolio customers and we’re a strong partner for those looking to grow into the portfolio space. Our forte is combining thoughtful underwriting with a comprehensive range of products and an innovate approach. Paragon has been very active offering customers the option to switch products. With remortgaging continuing

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to outstrip buy to let property purchases generally, do you think product switching will become more popular with borrowers? And if so, why? We think it’s important to offer customers a range of options as they come to the end of the initial term of a fixed rate product, including switch products and further advances. These won’t always represent a better solution than a full remortgage but it’s important that, where they do offer a viable alternative, the landlord through their adviser, has information they need and can make an informed choice. Our view is that a combination of switch and further advance should be considered on their merits, which is why we strongly recommend that customers work with their intermediary to identify the best solution for their individual circumstances.

others have only limited facilities for portfolio landlords. Combined with the impact of the fiscal changes, the implications for landlords are quite significant. The evidence we’re seeing suggests landlords are having to make more detailed plans in respect of how they structure their business going forward and, with a more restricted lender and product choice, they’re placing greater value on intermediary support. We have definitely seen a migration of the more complex portfolio business to specialist buy to let intermediaries and lenders. Have you seen an uptick in landlords using limited companies instead of borrowing personally?

Have the new PRA regulations caused any of your landlord customers difficulties when it comes to remortgaging?

Yes. Paragon has always provided facilities for incorporated landlords, but we’ve definitely seen a marked increase in landlords using limited company structures since the previous Chancellor George Osborne announced changes to income tax relief on finance costs for landlords in the summer budget of 2015.

The new regulations have clearly been quite disruptive and have resulted in a significant realignment of competition in the market.

As the impact of these changes become more evident for landlords we are likely to see more landlords adopting incorporated structures.

While Paragon continues to offer a very wide range of solutions, some lenders will no longer consider portfolio business and

Buy to let lending declined in 2017. Do you think this will be a trend that continues?

www.mortgagesforbusiness.co.uk

Q2 2018


LENDER IN THE SPOTLIGHT The government and regulatory intervention in the market has impacted landlord economics, particularly for individual portfolio landlords who are gearing their investments. According to UK Finance, this has led to a marked reduction in buy to let purchase activity across the market compared with the position two years ago prior to all the changes. Remortgage activity has held up well so far but it’s likely to drop as a result of the combined impact of regulatory change and the increase in longer term fixed rate lending. As a result, gross new mortgage lending will come under pressure over the next 3-5 years. Paragon now offers landlords residential mortgages; what’s so good about them? Residential first mortgages for

owner-occupied customers are a new venture for us. We’ve got a specialist proposition with a sharp focus on delivering individual solutions for intermediaries on their more complex cases. So far, what’s proving to be most valuable, is the close, one-to-one liaison that we can offer between intermediaries and our underwriters. Are the residential mortgages available to non-landlord borrowers? Yes. Our proposition is designed for the self-employed, customers with complex or multiple sources of income, customers looking to borrow into retirement and those seeking interest-only mortgages.

increase in May. If/when it does, do you think borrowers are prepared? If not, what should they do? Our long-standing landlord research, PRS Trends, suggests that landlords are well prepared to withstand an increase in interest rates. Gearing amongst our 200 plus landlord sample fell to an all-time low of 35% in Q4 2017, suggesting that borrowing levels are at very sustainable levels.

When do you think Bank Rate will rise?

In addition, more than half (55%) of those surveyed said they would not struggle to maintain their mortgage payments regardless of what happened to interest rates. Of the remainder, on average, landlords didn’t anticipate any difficulties until rates reach 6% or more.

Predicting the timing of a rate rise has been notoriously difficult in recent years but the current expectation is for a small

Take a look at how we helped one of clients using Paragon’s services below...

Buy to let mortgage for trading-turned-SPV limited company The Client: An experienced, full-time landlord who was previously a lawyer, looking to buy another rental property using his limited company as the borrowing vehicle, although the deposit was being provided by funds raised from the sale another buy to let property he had owned personally. The Property: A 3-bed detached house valued at £315,000 in a popular residential area of Bedford. The Finance: This case was a challenge for a couple of reasons:

1. Many lenders were not going to accept his limited company, which, nine months previously, had traded and was now classed as a Special Purpose Vehicle.

2. The deposit was from the client personally and not from within the company.

The solution: We approached Paragon, a buy to let lender which we knew would take a pragmatic approach. It doesn’t accept trading limited companies but with the help of the client’s accountant we could show that the company is now an SPV. This lender was also prepared to accept that the deposit was provided by the landlord personally. Having provided an acceptable paper trail with the mortgage application, the lender issued the following terms:

Value Loan amount LTV Rate Term

FirstRate

£315,000 £215,000 68% 3.89% 5 year fixed 25 years interest only

Lender arrangement fee Mortgage payment Rental income Gross yield Consultant

Call 0345 345 6788

1.5% (£3,225) £697 pcm £1,300 pcm 4.95% pa Beckie Pepperrell, 01732 471602

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COMMERCIAL - MEET THE TEAM

Commercial Desk Andy Elley

Gareth Richards

John Kennon

Paul Keddy

Steve Bedford

CeMAP, CertBB&C

CeMAP

ACIB

CB:PSB, CertBB&C

CertBB&C

01732 471644 andye@

01732 471627 garethr@

01625 416390 johnk@

01732 471655 paulk@

01732 471609 steveb@

@mortgagesforbusiness.co.uk

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www.mortgagesforbusiness.co.uk

Q2 2018


COMMERCIAL UPDATE

From buy to let to commercial Andy Elley, Head of Commercial, 01732 471644

We have seen a pick-up in enquiries from residential landlords looking to move into commercial investment, with a particular increase in those looking to purchase a semicommercial property e.g. shop with flats above. In my opinion, there are two strong reasons for this activity...

Firstly, commercial property (including semi-commercial property or mixed use as it is also known) is exempt from the 3% stamp duty surcharge that landlords and home-owners face when making additional residential acquisitions. To give an example; if you bought a residential property for £400,000 you would pay £22,000 in stamp duty if you own another residential property already. If you bought a semi-commercial property valued at £400,000 you would pay £9,500, regardless of whether you own another property or not. The second reason is yield. Semi-commercial properties tend to produce higher yields than vanilla buy to let. According to our latest Buy to Let Index (page 12 & 13) semi-commercial consistently produces higher yields – not dipping below 6.3% in the past year. Vanilla buy to let property on the other hand has not managed to break the 6% barrier in the same time period. Obtaining finance for semi-commercial property is relatively straightforward, as long as you either have experience in letting residential property, own an existing commercial property or are a high net worth individual. Rates tend to start from around 2.75% over Bank Rate on a capital and interest repayment basis. Interest only terms are available from the challenger banks and tend to sit at around 4.50% over Bank Rate. We have two lenders in the marketplace which will consider up to 80% loan to value on these applications.

Tenants purchasing freeholds Moving onto the commercial owner-occupier space, we have noticed tenants of existing trading businesses are increasingly being given the opportunity to acquire the freehold of the property.

a Grade II listed pub where he worked as manager and chef. Owner-occupier rates are available from 2.2% over Bank Rate with terms ranging from 15 to 25 years. Whilst each lender has its own preferences, there is appetite out there to lend to a variety of industry sectors to both investors and business-owners.

Your ‘one stop shop’ for commercial finance Between us, on the commercial desk, we have more than 100 years’ experience in the commercial lending market across a multitude of industries. Our expertise doesn’t go unrecognised and I am pleased to tell you that I am a finalist in this year’s British Specialist Lending Awards, hoping to win the title of Commercial Finance Broker of the Year – fingers crossed! We can arrange business mortgages, commercial investment mortgages, bridging, refurbishment and development finance, second charge and equity loans. Please do take a moment to read through our latest case studies to see how we have helped property investors and business owners recently. We have been trading since 1990 and there are not many other brokerages with as many key contacts! So, if you do have any questions please get in touch on 0345 345 6788, or email me directly on andye@mortgagesforbusiness.co.uk. Finally, I would like to take this opportunity to bid farewell to one of our team members – Richard Winston who is leaving us to join Hampshire Trust Bank. If Richard is your contact at Mortgages for Business, one of us on the commercial desk will be in touch to take over from where he left off.

For example, we recently helped a client purchase the freehold of

FirstRate

Call 0345 345 6788

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COMMERCIAL UPDATE

£1m commercial remortgage of holiday complex to raise finance The Client: A long-standing client who is an experienced, trading hotelier. He is also a part-time property investor and developer with a mixed portfolio of 10 residential and commercial properties. The Property: A B&B-cum-holiday let business spread across three separate freehold premises all sited around a pretty courtyard close to a busy tourist town.

The manager agreed that, in principle, the bank would be happy to provide the necessary finance. To support the mortgage application, we helped our client put together a strong business plan and collate the required supporting documents including: l

Management accounts and bank statements for the holiday business

The Finance: The client wanted to remortgage all three units to release £1m which he intended to use to expand his portfolio.

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Proof of identity, address and income for the client

The Application Process: We spoke to the local lending manager of a bank which we often work with on leisure industry deals.

The bank issued a formal mortgage offer less than two months later, which our client was delighted to accept.

Value Loan amount LTV Rate Term

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£1,525,000 (all 3 units) £1,067,000 70% 2.89% term tracker (Bank Rate + 2.35%) 20 years capital & interest

Lender arrangement fee Mortgage payment Consultant

www.mortgagesforbusiness.co.uk

1.5% (£16,005) £5,840 pcm Paul Keddy, 01732 471655

Q2 2018


COMMERCIAL UPDATE

Unsecured borrowing for business expansion Andy Elley, 01732 471644 Are you looking to expand your business? Perhaps you are looking to purchase a new premises, or you need funds for refurbishment. Andy Elley, Head of Commercial Mortgages, explains how we can help business owners achieve unsecured loans up to £10m.

Need access to some cash, but don’t want to take out another secured loan? We can help.

Funds can be used for the following purposes: l

First up, for those of you who are unsure of the difference between the two:

A secured loan: Lenders will require a fixed asset as security in case you cannot repay the loan. E.g. when you take out a mortgage, the property may be repossessed by the lender if you fail to repay the loan. Secured loans are favoured by lenders, as they pose less of a risk.

An unsecured loan: Lenders do not take security over a fixed asset. Instead, they may take a debenture over a company and its floating assets or get you to simply agree to making the regular payments. You may incur additional charges or run the risk of being taken to court if you fail to make the payments as agreed. We have access to lenders which are looking to support UK based small and medium-sized enterprises (SMEs) wanting to expand their business, offering loans from £250k to £10m on flexible terms. Instead of using a fixed asset as security, these lenders will take a debenture over the company and set an agreement which offers them security over the floating assets – stock, cash, fixture and fittings etc.

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Purchase of a new business premises or new sites Refurbishment of an existing premises Purchase of new business equipment Extra cashflow for a business project Restructuring costs Management buy-outs

To get started, you will need to be able to provide us with: l

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3 years’ full accounts for the business – this allows the lender to undertake a cash flow analysis Assets and liabilities statement 6 months’ business bank statements

To give some examples, I recently helped the owner of an independent school secure a loan of £2.4m to assist with expansion plans. I have also helped chartered accountants raise £264k to repay existing loans which were deferred consideration within the business. Need finance to help your business grow and aren’t getting the support you need? You can call me directly on 01732 471644 or call to the main commercial desk on 0345 345 6788.

Got a question? Ask our expert brokers today. Call 0345 345 6788 Email enquiry@mortgagesforbusiness.co.uk Visit mortgagesforbusiness.co.uk FirstRate

Call 0345 345 6788

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COMMERCIAL UPDATE

Bridging loan for company directors to develop mixed-use property The Clients: Four directors of a newly established SPV Ltd Co looking to break into property development. Each director is also in full-time employment all working in a managerial role. Between them, the directors own more than 10 rental properties. None of the directors have any property development experience. The Property: The directors were looking to purchase a mixeduse property located on a busy high street in Kent. The property consists of three floors – a retail unit on the ground floor and two flats above. The directors were looking to convert the two flats above into four smaller self-contained units. The retail unit would continue trading with the same tenant. The Finance: They had originally planned to buy the property using development finance, but this was not possible because planning permission was not in place and the schedule of costs had yet to be finalised. Promising the vendor they would complete within 26 days of putting in their offer, the directors decided they would need to go down the short-term finance route if they were to be successful with the purchase. Not wanting to repay the short-term finance in monthly instalments, the directors requested we source finance from a

Value £450,000 Loan amount £247,000 Proposed GDV £1,250,000 (after development) LTV 55% Rate 0.95% pcm

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lender which would roll up the interest and accept one bulk repayment on exit. The Application Process: We took the case to a specialist short-term lender, which is renowned for having an excellent turnaround time. We explained how the directors would repay the loan and happy with the exit strategy they agreed to consider the case. The chosen lender asked for the following documentation to support the application: l l l

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Proof of ID for all directors Proof of address for all directors Background history as landlords, including property portfolio spreadsheets Exit strategy details and project plans including projected GDV

We then worked with the directors to complete the application form and submitted it together with the supporting documents on their behalf. As expected, the funds were released within 25 days. Planning permission has since been granted and we are now working with the directors to secure development finance. Here are the details of the bridging deal:

Term Lender facility fee Lender exit fee Monthly payment Consultant

www.mortgagesforbusiness.co.uk

4 months 1.5% (£3,705) Nil Nil (rolled up with interest rate at end of loan term) Gareth Richards, 01732 471627 Q2 2018


COMMERCIAL UPDATE

3 reasons for landlords & property developers to use short-term finance Gareth Richards, 01732 471627 Expert commercial mortgage broker, Gareth Richards, identifies three common uses of short-term finance and tells you what you can expect in terms of rates, fees and time-scales.

In recent years, short term finance or bridging as it’s often called has increased in popularity and is now a multi-million pound business in its own right. It’s shed its “finance of last resort” reputation and is now a regular part of most landlords’ and developers’ toolkit. Often it is used:

1 2 3

To buy property at auction Properties bought under the hammer usually have 28 days in which to complete which doesn’t leave much time to organise longer term finance. Whilst there are some buy to let lenders which can complete a mortgage application within this timescale, it can be touch and go, so short term finance can be a safer route. These days some buy to let lenders will even let you refinance straight away – in days gone by you had to wait for six months.

To purchase land or property ahead of planning approval This is a common practice with many property developers, particularly, where they have identified land or property which is likely to get planning consent.

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Terms up to 12 months, a handful will go to 24 months Loans from £50,000 to £25,000,000 (and beyond…) Rates from 0.55% per month Arrangement fees around 1.5% - 2% of the loan amount Up to 80% loan to value

How to repay a bridging loan Your exit strategy from the loan is key to being offered finance,

Most lenders will consider: Individuals, partnerships, limited companies and LLPs Some lenders will consider: Trusts, offshore companies, foreign nationals and ex-pats

Acceptable security l l

First charge over the property Some lenders will consider a second charge and additional security (usually a first or second charge over a separate property)

Application processing times

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Lenders will only grant buy to let mortgages on habitable, “ready to let” properties. Many landlords and developers using bridging to purchase properties that require work before they can be let out. Once the property is habitable, they then refinance the property onto a buy to let mortgage – or sell the property on.

FirstRate

Acceptable borrowers

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To buy properties in need of refurbishment

Bridging loan rates and terms l

i.e. how will you repay the loan. Commonly, loans are serviced in two ways. Firstly, by making monthly interest payments and then repaying the capital amount at the end of the term. Secondly, by having the interested rolled up into loan, and paying off the entire amount (capital and interest) at the end of the term. The most widely used exit routes are refinancing or selling the property on.

Agreements in principal within four hours (can take up to 24 hours) Processing times vary. We often seen cases go from application to completion within 2-3 weeks, although it can take longer.

Processing the application It’s our job to ensure that you get the money as quickly as possible. We prepare the application and supporting documentation making sure it’s in the right format for the chosen lender. We submit it for you too, and make sure it stays on track. We’ll just keep you updated. Remember our initial advice is totally free of charge and without obligation. If you’re unsure of anything, please ask. We aim to be transparent about the process, the fees and your chances of securing finance, so do get in touch to chat through the possibilities even if you’re not ready to move forward straight away. Call me directly on 01732 471627 or our main line below.

Call 0345 345 6788

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COMMERCIAL UPDATE

Commercial mortgage for landlords purchasing first hotel The Clients: A married couple with a large portfolio of rental properties located in London. The husband is self-employed consultant and his wife is a doctor.

more pragmatic approach because of the couple’s high-net worth status and large portfolio of rental properties. (If necessary they could hire in experienced management staff to support them).

Looking for a change in lifestyle the couple had set their sights on a hotel in Devon, which they planned to move into and run as a business. The wife was going to leave her job as a doctor and focus solely on the hotel business. The husband was to continue with his consultancy business and take on some of the administration tasks of the hotel to support his wife.

We worked with the couple to collate the following documentation to support the application.

The Property: The hotel, valued at £850,000, is a short stroll from Torquay’s main beach. It has 12 en-suite bedrooms, a private bar, swimming pool and hot tub. The Finance: The couple were planning to sell their home, which would give them a generous deposit of £350,000. The main challenge with this deal was that neither applicant had any experience in the leisure sector – the majority of lenders would decline an application on this basis. The Application Process: We approached the business development manager of a high street bank to discuss the case. Although, this particular lender usually requires experience, the business manager believed that the underwriters would take a

Value Loan amount LTV Rate Term

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£850,000 £500,000 59% 3% term tracker (Bank Rate + 2.5%) 15 years capital & interest

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A business plan for the hotel with projected turnover and profit targets

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2 years’ business accounts from the husband’s consultancy business

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3 months’ worth of bank statements

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Proof of identity

Within a few days the lender’s surveyor got to work and produced a comprehensive valuation report of the hotel. The couple were delighted to receive an offer, just one month after submitting the application. Three months after, the funds were released. The couple are now enjoying their new life as hoteliers.

Lender arrangement fee Mortgage payment Consultant

www.mortgagesforbusiness.co.uk

1.5% (£7,500) £3,452 pcm Andy Elley, 01732 471644

Q2 2018


COMMERCIAL UPDATE

Commercial mortgage for non homeowners purchasing 14-bed HMO The Client: A married couple, originally from Poland, who have been living in the UK for more than 10 years. The husband is an experienced, full-time HMO landlord. The wife is employed in the health and beauty sector. Although they do not currently own their own home in the UK, they have done in recent past and as result of the sale have savings of c£100k.

Finally, a landlord-friend pointed them in our direction. We immediately knew which lender would consider the case, so got in touch. As expected the lender’s business development manager said that they would be happy to accept the case, although it would be underwritten on commercial terms rather than on a buy to let basis.

The Property: A fully occupied, 14-bed licensed HMO in a busy West Country which the couple own on a leasehold basis. The freehold of the property came up for sale and the couple were given first refusal rights to buy.

The Application Process: We then worked with the couple to put together the supporting documentation for the mortgage application. This included two years’ worth of the husband’s trading accounts and six months’ personal and business bank statements. After the application was submitted, a valuation was booked.

The Finance: Keen to purchase the freehold, the clients approached several high street banks for a mortgage but without success. They also approached a few mortgage brokers who were unable to help. Their main challenges were: The couple do not own their own home or any other property – most buy to let lenders insist on this as a minimum requirement. The HMO has 14 bedrooms – too many bedrooms for even some of the specialist buy to let lenders.

Value Loan amount LTV Rate

FirstRate

£300,000 £210,000 70% 4.35% term tracker (3.60% + Lender’s LIBOR)

The surveyor’s report confirmed that the property was suitable security for loan, and the business manager confirmed that they would be happy to offer one of their buy to let rates. We then worked with the couple, the lender and the solicitors to get the mortgage through to completion.

Term Lender arrangement fee Mortgage payment Consultant

Call 0345 345 6788

10 years’ interest only 1.5% (£3,150) £771 pcm Andy Elley, 01732 471644

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COMMERCIAL UPDATE

Mortgages for care homes With the UK population expected to reach over 74 million by 2039 and with 18% of the population now aged 65 and over (ONS, 2017), it is no surprise that the care sector is becoming a very attractive market from both a business and investment perspective. Find out what funding options are available to you...

Trading businesses operating in the care sector have seen significant uplift in value over the past three years and are now typically being valued at between six and ten times their adjusted net profits. Profitability of care homes tends to range between 23% and 35% of the turnover (depending on how they are run – of course!).

Experience is crucial In this sector, if you are looking for a mortgage to purchase and run a care home then experience is absolutely key. Most lenders will only fund experienced, established operators with a minimum of 2-3 years proven track record in the industry. This doesn’t mean that there aren’t options for investors looking to make their first care home purchase but you must have specific industry-related experience under your belt. This applies whether you are looking to run the care home yourself, or put managers in to run the establishment for you. Lenders will also be keen to see you have a registered management qualification, for example NVQ 4. If you don’t have the management qualifications then asking the existing manager of the care home to join your team may be an option, although this will mean putting them on your mortgage application.

What sort of care home should you buy? Freehold care home: The purchase or refinance of an established, successfully trading care home in a desirable location is preferable to lenders. Most lenders prefer a care home that has more than 20 bedrooms. The maximum loan to value you can achieve on a smaller care homes will be less than on one with 20+ beds. Leasehold care home: When purchasing the leasehold, lenders typically require supporting, tangible security, i.e. your home or other property you may own. In the absence of this, some lenders may provide an Enterprise Finance Guarantee loan which means you get the backing of the Government. Bear in mind that the loan term offered to you is unlikely to exceed the length of the remaining lease.

It is worth bearing in mind that the Care Quality Commission (CQC) will also interview new entrants to the market and pass them through their application process. Criminal Record Bureau checks are also taken and clear searches are a prerequisite. If you want to fund the purchase of a care home that is no longer trading and you plan to refurbish or even redevelop it, then a bridging loan will most likely be your only option in the first instance. Whilst it is often easier to secure short term finance, the lender will want to fully understand your exit strategy and will most likely insist that you have both development and care home experience.

Expect to receive: l

Scrutinising the trading accounts

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As expected, any lender will want to scrutinise both the CQC report and the trading accounts of the care home to ensure that it is suitable and that the loan can be serviced. Whether purchasing a lease or a freehold you will need to provide the latest three years’ annual trading accounts. Lenders will then assess affordability based on the financials and typically lend up to 5-6 times the adjusted net profits after taking into account your personal drawing requirements.

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Mortgage rates for care homes

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Rates staring from around 2.1% above Bank Rate Lender arrangement fees from 0% - 2% of the loan amount Most lenders will look at a maximum term of 15 – 25 years capital and interest (25 years for borrowers with a strong track record in the industry and large deposit). Interest only terms tend to available on a 6–12 month basis. The loan to value achievable varies significantly, generally between 55% and 70%. If supporting security is provided, banks may lend more than 70%.

www.mortgagesforbusiness.co.uk

Q2 2018


COMMERCIAL UPDATE Mortgage application processing times for care homes Application processing times vary, ranging between three and seven months. If this is your first purchase you could be looking at nearer the seven-month end of the scale, as you will need to allow for a CQC application and interview.

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How to apply for a loan to buy or re-mortgage a care home To get the ball rolling we will need: l

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The latest 2-3 years’ accounts for the care home you are looking to finance If you are an experienced, multi-site operator – last three years account for your main care home An overview of your background and experience (CV if available) Copies of your latest six months’ personal and business bank

statements A schedule of your assets and liabilities Proof of your identity and address Sales particulars for the business, e.g. management information from last trading accounts to date Occupancy schedule for the home Last two CQC reports – showing no major issues with the home

Our head of commercial has been helping clients get care home funding for more than 15 years and previously, worked for a business agent that sold care homes, so really does know his stuff when it comes to this! If you want to talk through the options he can be contacted directly on 01732 471644. Alternatively, you can call the main line on 0345 345 6788 and ask for the Commercial Desk.

Remortgage of 7-bed care home for people with learning disabilities The Client: A broker with no knowledge of the care sector approached us to source finance for his client, a registered care home owner with more than 25 years’ experience.

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The Property: A seven-bed Victorian house in the Midlands which the client owns personally. It is registered and run by the client as a home for people with learning disabilities. The client runs the business through a limited company which pays him rent for the property. The Business: The client successfully trades the home which turns over around £250k a year and generates profits of c£74k. However, after a statutory inspection in 2016, a Care Quality Commission (CQC) report raised a few minor issues which the client subsequently addressed. The Finance: The client was looking to raise £210k of capital on the home to repay an expensive bridging loan which he had used to buy out a former business partner from the limited company. We approached the business development manager of a high street bank with which we have successfully placed similar deals in the past to discuss the case. After an initial assessment, the she referred the case onto a local relationship manager who is situated closer to the home. In the meantime, we worked with the broker and his client to put together a proposal for the lender which included:

Value Loan amount LTV Rate

FirstRate

£400,000 £210,000 52% 4.63% 10 year fixed

Trading accounts for the last three years Latest two years’ CQC reports Latest six months’ business and personal bank statements Up to date occupancy schedule with relevant management information

The bank manager then visited the home and the client to discuss possible terms – the client was keen to secure a 10 year fixed rate. Both the home and the proposal passed muster with the manager who confirmed that the bank would be willing to lend subject to the property passing both a valuation and the CQC re-inspection which was scheduled for late 2017. Confident that the home would pass the CQC inspection, the client gave the go ahead for the property to be valued. The valuation report confirmed that the property was good security for the requested loan. A nervous wait of a few weeks followed, then in January, the client was delighted to receive a report confirming that the home has passed the reinspection. We then worked with the broker, his client, the bank and the legal representatives to ensure that the mortgage application was processed through to completion. Here are the details:

Term Lender arrangement fee Mortgage payment Consultant Call 0345 345 6788

15 years’ capital & interest 2% (£4,200) £1,661 pcm Andy Elley, 01732 471644

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RESIDENTIAL - MEET THE TEAM

Residential Desk Gavin Richardson

Charlie London

Emma Knapp

Erin Gallacher

Pete Coombes

CeMAP

CeMAP

CeMAP

CeMAP

01732 471604 charliel@

01732 471659 emmak@

01732 471692 ering@

01732 471668 petec@

CeMAP, Cert CII

01732 471602 gavinr@

@mortgagesforbusiness.co.uk

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www.mortgagesforbusiness.co.uk

Q1 2018


LENDER IN THE SPOTLIGHT RESIDENTIAL UPDATE

Are you prepared for interest rate hikes? Gavin Richardson, Head of Residential, 01732 471613 Many experts predict that the base rate will be raised in May and this could be followed by further rises in the months to come. If hikes do materialise, will your monthly mortgage payments rise? Will you be able to afford it?

According to the parent company of both the Clydesdale and Yorkshire banks, 47% of us in Britain are unaware that Bank Rate may be about to go up and, more worryingly, 57% of us do not know how a rise might affect our finances. If interest rates are increased, market commentators suggest that the rise will be a small one, perhaps just 0.25% which would take the base rate to 0.75%. If you are not on a fixed rate mortgage, do you know how much a rise of this amount could add to your monthly payments? Probably not a lot, but if the Bank of England’s Monetary Policy Committee continues to vote for more, incremental rises this year, the knock-on effect could leave you seriously out of pocket. With householders’ incomes already stretched, now is a good time to review your finances, starting with your mortgage. If you want help working out how much more each month you would need to find, on our website, we have an easy to use mortgage repayment calculator.

A good time to remortgage? Currently, mortgage pricing is about as good as it has ever been, with lenders competing with each other to offer the best deals, so if you want to protect yourself against increased monthly payments, now is a good time to consider remortgaging onto a fixed rate. But don’t consider for too long… ACT too! Mortgage rates are already creeping up, albeit marginally, particularly the longer period fixed rate products. As soon as the market turns, lenders will stop competing with each other and start competing with you, the borrower.

Fast product transfers Many lenders are offering product transfers, which is a simple and very fast way of remortgaging with very little paperwork. This can be the most cost-effect route, particularly if you are not looking to raise any capital. But how do you know if this will be the best deal for you? That’s where we come in. We offer free mortgage reviews. With access to the whole market, and a variety of tools at our fingertips, we can very quickly work out which refinancing option is best for you. It will save you lots of time, doesn’t cost anything and you’re under no obligation. If a product transfer directly with your lender is the best route, we’ll tell you.

FirstRate

Moving house? If you are looking to move house, the news is mixed. If you blend the various house price trackers together, a fairly flat picture emerged for the first few months of this year. Nationwide reported prices were down -0.3% but Halifax reported the reverse, up +0.4%. Up or down, in recent months the actual rate of house price growth has slowed. This is good news if you’re are planning to buy. According to Russell Galley, managing director of Halifax Community Bank, January witnessed the lowest rate of house price growth for nearly five years. It’s way too hard to predict how long this slowdown will last but according to Rightmove, the number of newly marketed properties has dropped, equivalent to a 5% dip in supply compared to March 2017. As we all know, there is a direct correlation between supply and demand, and fewer properties listed for sale has led to a rise in asking prices – again according to Rightmove and they really should know. Commenting on the findings, director and housing market analyst at Rightmove, Miles Shipside, said that sellers should be mindful of buyer affordability saying: “The more they increase prices, the more buyers will hit their ceiling on the amount they are able to save for a deposit or borrow for a mortgage.” Of course, asking prices are not sold prices; they are just a starting point and coupled with flat market canny buyers should have the impetus to negotiate hard.

How much can you borrow? I’m sad to say that Paragon is no longer offering its amazing six times income mortgages. We knew this semi-exclusive deal, to which we had access, would not be around for long. However, it is possible to borrow up to five times income, although your credit rating will have to be squeaky clean. And remember, the larger your deposit, the better the deal. But as I’ve already said, pretty much all rates are currently very competitively priced. Remember that mortgage offers are valid for anywhere between three and six months, so it’s definitely worth applying sooner rather than later, even if you haven’t found the right property. If your current home has enough equity, you might also want to consider Let to Buy, i.e. turning your home into a buy to let when you move. As you can imagine, lots of our clients are landlords and many of them have gone down this route – it’s how some of them started in property investment…

Call 0345 345 6788

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LENDER IN THE SPOTLIGHT RESIDENTIAL UPDATE

Mortgages for expats Emma Knapp, 01732 471659

Mortgage applications from British passport holders living or working abroad are on the increase. Emma Knapp, expert mortgage adviser, explains what expats need to know to get the mortgage they need.

If you are an expat looking for a mortgage on a UK property, I would not recommend searching the market yourself because there are just too many variables. Every lender has its own borrowing criteria and application process, for example. l

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Some lenders will only deal with applicants who work for a multi-national organisation Some lenders have minimum income requirements Some lenders will only accept applicants who are paid in a certain currency All lenders have their own list of unacceptable countries. If the country you live in is subject to international financial sanctions, you may find it impossible to borrow

All these can make finding the right mortgage product difficult. That’s where an experienced broker can help! Having said that, you can help the process by preparing your paperwork in advance. All lenders will want to see some or all the following in support of a mortgage application: l l l l

A UK bank account with the latest 3-6 months’ statements A British passport Your overseas’ address (not a post box) Details of your employment (i.e. contract)

Home-buyer or buy to let mortgage? Most of the enquiries we get from expats are for buy to let mortgages, (for both purchases and remortgages). Expats use buy to let as a way of retaining property in the UK. Unlike a home-owner mortgage, the rent ensures that the mortgage payments can be met, and the tenants ensure that the property is not left vacant. If you’re about to move abroad, you must ask your mortgage lender for consent to let if you plan to rent out your home whilst you are away. This is often granted for 6-12 months but is not a long-term solution. If you don’t get this consent, or it’s run out, you could consider trying to remortgage your property onto a

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buy to let. Unfortunately, there are difficulties with this option. Most lenders like the borrower to provide evidence of a forwarding purchase or address, and most will not accept addresses overseas. So it’s a bit of a catch 22… If you are in this situation, do get in touch to talk through the options. I’m not promising we can help but we’ll certainly try. As with any other buy to let mortgage, if you are borrowing personally, the rent must usually cover the mortgage payments by at least 145%. If you are borrowing via Ltd company, 125% is more common. If you are moving abroad or already living overseas and don’t own a property in the UK, some lenders will consider first time buyer landlords although you will have more options if you already own a UK property. In a few circumstances it may be possible to get a home-owner mortgage, for example, if you work abroad whilst your family continues to live in the UK. Home-owner mortgages for expats returning to the UK. There’s no such thing as an ex-expat! Once you are back in the UK you will be viewed as a UK resident which means you should have more options, as long as you meet standard borrowing criteria of course. However, if you are living abroad but planning a return to the UK, you won’t be able to get a mortgage until you have actually made the move back. I hope this blog has been useful. Whether you are an expat or a UK resident, do feel free to contact me for advice. Remember, we only charge fees if we are successful in getting you an acceptable, formal mortgage offer, so you’ve nothing to lose by chatting through the options. You can call me directly on 01732 471659 or call the main line on 0345 345 6788.

www.mortgagesforbusiness.co.uk

Q2 2018


LENDER IN THE SPOTLIGHT RESIDENTIAL UPDATE Couple save £1,200 pcm remortgaging onto interest only terms The Clients: A married couple living in London. The wife is currently on maternity leave, which she plans to extend, the husband is a full-time landlord with a large portfolio of rental properties. Having come to the end of their initial mortgage term, they had approached us looking to refinance onto a better rate. The Property: Their family home is a four-bed semi-detached Victorian house in East London. The Finance: The couple’s mortgage payments had recently increased after moving onto their lender’s standard variable rate. As they were now looking to refinance, they had decided to take this opportunity to move onto interest only terms. Interest only terms aren’t widely available as lenders aren’t comfortable with borrowers selling their home to repay the loan. We approached the intermediary arm of one of the high street lenders to see if they could assist. As the couple have a buy to let portfolio, the lender was willing to offer part interest only terms, as the buy to let properties can be used as part of their exit strategy. The Application Process: We helped our clients complete the mortgage application form and collate the supporting documentation which confirmed their identity, address and assets. We then submitted the application for processing. The bank requested a letter from the wife’s employer confirming her salary and date of return to work. This was duly obtained and mortgage completed within the agreed timescale. By refinancing the couple have saved £1,200 a month in mortgage payments.

Value Loan amount LTV Rate Term

£620,000 £420,000 68% 1.40% 2 year fixed 25 years part repayment part interest only

Lender arrangement fee Mortgage payment Original payment Consultant

£999 £671 pcm £1,871 pcm Emma Knapp, 01732 471659

First-time buyer away on business secures mortgage offer within 1 month The Client: A young accountant looking to purchase her first home after years of renting. With a busy work life, she didn’t have the time to focus on finding the best mortgage so came to us for help. The Property: A 3-bed, semi-detached house in sought after commuter village in Surrey. The Finance: The client’s deposit was made up of personal savings and a cash gift from her parents, the total equated to just over 25% of the purchase price. The Application Process: As the client was away on business, we carried out all correspondence via email. We worked with the client to complete the application form and collate the supporting documentation, which included three months’ bank statements, proof of address and proof of identity. Happy with her income and history of reliable rental payments, our chosen lender presented us with an offer within one month of submitting the application. Here are the details:

Value Loan amount LTV Rate

£385,000 £280,000 73% 1.79% 5 year fixed

Lender arrangement fee Mortgage payment Consultant

£1,499 added to loan amount £1,158 pcm Charlie London, 01732 471604

Do you know someone looking to buy their first home? Visit our website for Charlie London’s latest blog on Help to Buy Schemes. FirstRate

Call 0345 345 6788

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LENDER IN THE SPOTLIGHT RESIDENTIAL UPDATE

Should I overpay my mortgage? Erin Gallacher, 01625 416392

Erin Gallacher, residential mortgage adviser looks at the benefits of overpaying your mortgage and the implications of doing so.

It may surprise you, but on a weekly basis I am almost guaranteed to get a call from a client asking whether or not they should overpay their mortgage. The answer, in my opinion is always YES (if funds allow of course!). As with all financial decisions, there are however a few things worth considering before you hand over the cash…

Types of overpayment: Lump sum

Can you comfortably afford to overpay?

If, however, cash flow is more important to you, once you have paid the lump sum, the lender can adjust your monthly payment down to reflect your new, lower balance. With this option, bear in mind you won’t pay off your mortgage sooner and you won’t save as much as making monthly overpayments.

It is always a good idea to have an emergency fund, so if overpaying leaves you without a cushion to fall back on, I wouldn’t advise it.

Do you have any other debt? If you have any other debt outside of your mortgage at a higher rate of interest, then it may be worth looking at repaying this first. A qualified independent financial adviser (IFA) will be able to tell you which option will be most beneficial to you in the long run, so if you are unsure give one a call.

Does your lender impose any restrictions or penalties? Early repayment charges (ERCs), also known as early redemption charges will be detailed within the terms of your mortgage and state what you will be charged if you repay your mortgage early. The charge usually ceases once the mortgage is out of its initial term, but it is worth checking first. However, most mortgage deals allow you some degree of flexibility throughout the mortgage, even during the ERC period. Normally you can overpay by up to 10% of the mortgage balance each year without being charged.

If you give the lender a lump sum and then opt to continue to make the same monthly payments as before, ultimately you will pay back your mortgage ahead of schedule, potentially saving you shed loads of interest.

No lump sum If you have spare cash every month, you could simply choose to up your monthly mortgage payments. Some of my clients have chosen to do this because their mortgage rate is higher than the interest rate on their savings account, so in the long run they will be better off. As with all these things, which option you choose, will depend on your individual circumstances and how much your lender will allow you to overpay.

Start overpaying now To set up a regular overpayment and/or pay a lump sum, you’ll need to talk directly to your lender. If your income is irregular, it is usually possible to make ad hoc lump sum overpayments but again, give your lender a call to discuss.

Off-set mortgages Now, onto the benefits of repaying your mortgage early…

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The quicker you pay off your mortgage, the less interest you pay. As a guide, if you had a mortgage of £150,000 which you repaid over 25 years on an interest rate of 1.29%, you would pay interest over 25 years of £77,910. If you paid the mortgage off over a shorter period of 20 years then you would pay interest of £59,293 (i.e. saving £18,617). Most lenders charge interest on a daily basis, so if you pay off a lump sum, your mortgage is adjusted straight away and interest will be charged on the reduced balance within 24 hours. Even making a small overpayment each month will make a huge amount of difference to you over the mortgage term.

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Slightly off-piste but similar! An offset mortgage account is a bank account that is linked to your mortgage. It allows you to use your savings to reduce the amount of interest you pay on your outstanding mortgage balance. It’s a bit like overpaying and means you could pay off your mortgage more quickly with the added bonus of still be able to get access to your money. On the flipside, you don’t earn interest on cash held in the account and rates are generally higher. Offset mortgages tend to work best for borrowers who have a large pot of savings that they can afford to leave untouched. If you have any questions about overpaying or offset mortgages, please do get in touch. You can call me directly on 01625 416392 or call the main line on 0345 345 6788.

www.mortgagesforbusiness.co.uk

Q2 2018


LENDER IN THE SPOTLIGHT RESIDENTIAL UPDATE Accountant with missed mortgage payments buys 2nd home The Client: A chartered accountant who works full-time for a large company asked for our help to get a mortgage to buy a second home to use at weekends and for holidays. The Property: A 4-bed semi-detached Victorian villa requiring some TLC in a popular coastal town on the South Coast. The Finance: Even though the client had a deposit of 25%, two issues ruled out quite a few lenders: Interest only terms: The client wanted interest only terms to keep the monthly mortgage payments to a minimum which would ensure that she had enough cash flow to make the necessary refurbishments to the house. Recent missed mortgage payment: Yes, it can even happen to accountants! The client had simply forgotten to move money from her main bank account to her mortgage bank account which resulted in a missed payment. Even though the client had rectified the situation immediately, the default was still recorded on her credit profile. Apart from that one blip, her credit profile was clean. We identified a high street bank which we knew would take a pragmatic approach. Here’s what happened: We spoke to the bank’s Business Development Manager and ran through the client’s circumstances and requirements. The BDM felt that our client would be given interest only terms because the property was a second not primary home purchase. He also thought that if the client could prove that the missed payment was a simple mistake then this would be overlooked. So, on behalf of our client, we applied for a Decision In Principle (DIP) which was duly given. We then submitted the full mortgage application and the subsequent valuation confirmed the property would provide the bank with sufficient security. In addition to the standard, supporting documents, the lender asked the client to provide copies of her bank statements for the period when she missed the mortgage payment to demonstrate that she had made a simple, clerical error. The client promptly sent these in and the bank agreed to lend. We then worked with our client, the lender, the estate agent and the solicitors to keep the application on track and both the mortgage and the purchase completed just four weeks later. Here are the details:

Value Loan amount LTV Rate

£560,000 £420,000 75% 2.02% 2 year fixed

Term Mortgage payment Lender arrangement fee Consultant

25 years interest only £706 pcm £999 Charlie London, 01732 471604

Fee-free 10 year fixed rate remortgage completed inside 7 days The Client: A single mum from Kent approached us looking to refinance her home, as the mortgage was about to revert to the lender’s SVR meaning her monthly payments would rise. As well as caring for her children, the mother of two also works full-time as a teaching assistant in a local primary school. The Property: A three-bed terraced house on a residential estate in Ashford. The Finance: Concerned about future interest rate rises, the client wanted to understand the pros and cons of taking a long term fixed rate mortgage which would offer her security in the coming years. So we chatted through the current options and she chose a 10-year fix rate product without arrangement, valuation or legal fees. Even better, the rate would actually reduce her monthly mortgage payments by £12. The Application Process: We worked with the client to complete the application form and collate the necessary documentation, which included proof of ID and income. Within 24 hours of submitting the application the lender had instructed a desktop valuation and made a formal offer. The entire remortgage completed the following week! Here are the details of the deal:

Value Loan amount LTV Rate FirstRate

£240,000 £83,000 35% 2.49% 10 year fixed

Term Mortgage payment Lender arrangement fee Consultant Call 0345 345 6788

15 years interest only £552 pcm Nil Pete Coombes, 01732 471668

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LENDER IN THE SPOTLIGHT RESIDENTIAL UPDATE

How to choose the right mortgage Pete Coombes, 01732 471668

A mortgage is probably the biggest financial commitment you will ever take on but where should you go for advice? How do you start looking and how can you be sure that you made the right choice when there are thousands of options available? Pete Coombes has some answers.

Your bank or building society? Lots of people think that speaking to their bank or building society directly is the best or even, only option, not just for a mortgage but other loans too. I believe people do this out of loyalty. They believe that because their bank already knows them and their income and expenditure patterns, the bank will be more likely to lend to them. And better the devil you know, right? Wrong! Your bank (or building society) can only offer you one of their own products. Whilst this may well be the best borrowing option, you won’t know if it is if you haven’t checked out all the other mortgages on the market. And what if the bank won’t lend to you at all or won’t lend you the amount you want to borrow?

Your current mortgage lender? A bit like above! Your existing lender knows you as a customer and knows how well you can deal with financial commitments. However, they will have a limited number of products that they can offer you as they will only be able to provide products from their own range.

Research online? Most people start searching for a mortgage online. Using the comparison shopping sites is a very good way of getting a flavour of what rates to expect but even though these sites throw up a variety of products, they don’t actually tell you if you are suited to any of the rate – they just make a guess based on the very limited criteria you give them. And do you really have time to check each one in depth? Also bear in mind that the mortgage market has really changed over the last 10-15 years. Gone are the times of self-cert mortgages and execution-only mortgages. And interest-only terms are very limited.

Estate agents’ “in-house” broker? A lot of the time the estate agent will ask you to be “financially qualified” to give their vendor peace of mind that you are in a buying position and that you are good for your money. Many ask you to speak to their broker based within the estate agents. You do not have to speak with them! The estate agent wants you to use the in-house broker so that they can earn a referral commission. Plus, they want control over both the buyer and the

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seller. In-house estate agents are sometimes tied to certain lenders, so make sure you check before proceeding. It’s really important that the mortgage you choose is the most suitable option for you. Tied agents won’t be able to make that assessment based on the whole market. And they are likely to want a face-to-face meeting (sometimes two or three meetings), which is all very well, if you have the time.

Whole of market mortgage broker? YES! In my opinion this is your very best option. A mortgage broker’s job is to source the most suitable option for you, to ensure you meet the lender’s criteria requirements and find you the most competitive deal available at the time of application. A good mortgage adviser will have strong relationships with lenders and know the market like the back of their hand. They can save you time and money. Mortgage brokers which have access to the whole market are better positioned to find the very best loan for your circumstances. A good mortgage adviser will even tell you when the best deal for you is available by going directly to the lender! Having said that, it’s worth bearing in mind that many, many mortgages are only available via mortgage brokers. Yes, that right, a lot of the UK lenders require business to be submitted via a qualified adviser. They do this as a sort of quality control filter. Lenders trust mortgage brokers to get all the administration in order before submitting an application. That means guiding the customer through the entire process, liaising with all parties and keeping things on track. Here on the Residential Desk at Mortgages for Business, we regularly speak with clients who have been dealing with their bank, their current lender, have looked online, or even talked to other brokers who have been unable to help them. They come to us to see if we can help. And can we help? We can always help! We are very good at getting our customers the mortgages they need. And in the unfortunate event we discover that you can’t get a mortgage straight away, we will happily share our knowledge to help you get a mortgage in future. We love a challenge and take great satisfaction when we can help and make a difference to our client’s lives. Why not give us a call???

www.mortgagesforbusiness.co.uk

Q2 2018


LENDER MFB NEWSIN THE SPOTLIGHT Awards For the seventh year running Mortgages for Business has won the title of Buy to Let Mortgage Broker of the Year at the annual Business Moneyfacts Awards.

We are also delighted to announce that we have been shortlisted in an impressive three categories of the British Specialist Lending Awards 2018.

The announcement was made by Strictly Come Dancing star, Claudia Winkleman, who hosted the event which is widely recognised as the most prominent business finance awards ceremony in the UK.

Staff shortlisted for a British Specialist Lending Award include Jeni Browne, in the Complex Buy to Let Broker category and Andy Elley in the Commercial Finance Broker category. David Whittaker, founder of Mortgages for Business, is a finalist for the Business Leader award in his role as CEO of Keystone Property Finance.

Commenting on the win, David Whittaker, CEO at Mortgages for Business said: “Seven years and counting – we must be doing something right! And of course, we are delighted. It shows that we are recognised by our peers for our contribution to the industry, which has faced so many challenges in recent years. Our sincere thanks to everyone who voted for us in such a competitive category.” Our congratulations go to Mortgages & Insurers Solutions who were highly commended and The Buy to Let Broker who were commended. Keystone Property Finance was also commended on the night.

Events Come and say hello! Within the next quarter we are exhibting at three landlord facing events.

Property Investor & Homebuyer Show Friday 20th & Saturday 21st April 2018 London ExCEL Stand: 310 National Landlord Investment Show Wednesday 16th May 2018 Aston Villa Football Club Stand: 7 National Landlord Investment Show Thursday 14th June 2018 London Olympia Stand: 34

Charity A special mention to Andy McOwat - one of consultants here at Mortgages for Business for raising over £10k for the Cystic Fibrosis Trust. Andy has been running the Manchester 10k to raise money for the charity for the past eight years and shows no sign of stopping anytime soon! Cystic Fibrosis (CF) is a genetic condition affecting more than 10,400 people in the UK. You are born with CF and cannot catch it later in life, but one in 25 of us carries the faulty gene that causes it, usually without knowing. The Cystic Fibrosis Trust work towards a brighter future for everyone affected by the genetic condition. Donations made to the charity help to fund cutting-edge research, drive up standards of care and support those affected. To support Andy in his next run on 20th May 2018 please visit his Just Giving page: justgiving.com/fundraising/andymcowat18

FirstRate

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 (and Remortgages) for Ltd Co applicants Rate

LTV

Description

Lender Fee

APR

RTI

ERCs

3.44% 5 year fixed

70%

Fixed at 3.44% for 5 years reverting to lender’s LIBOR + 5.89% (LIBOR currently 0.65%, variable).

1.5%

5.8%

125% @ 3.44%

Yes

Available for purchase and remortgage applications. This rate offers a very generous stress test for SPV & trading limited companies. This lender accepts first-time landlords and portfolio landlords. 3.54% 5 year fixed

75%

Fixed at 3.54% for 5 years reverting to lender’s LIBOR + 5.89% (LIBOR currently 0.65%, variable).

1.5%

5.8%

125% @ 3.54%

Yes

Purchase and remortgage applications for SPVs, trading Ltd Co’s & portfolio landlords. This lender accepts first time landlords and will allow applicants to be 85 years old at the end of the loan. 3.68% 5 year fixed

65%

Fixed at 3.68% for 5 years 2% reverting to lender’s LIBOR + 5% (LIBOR currently 0.52%, variable)

5.2%

125% @ 3.68%

Yes

This rate is ideal for SPV Ltd Co’s looking to purchase or remortgage HMO or multi-unit properties. This lender allows remortgages at day one of ownership and does not require a minimum income.

Buy to Let Mortgages (and Remortgages) for borrowing personally Rate

LTV

Description

Lender Fee

APR

RTI

ERCs

1.99% 5 year fixed

50%

Fixed at 1.99% for 5 years (to 31/05/2023) reverting to lender’s Standard Variable Rate (currently 4.49%, variable)

£1,995

3.9%

145% @ 4.99%

Yes

Available for purchase, remortgage and further advance applications. This product offers a very generous stress test for individuals, and doesn’t require a minimum income from the client. 2.44% 5 year fixed

60%

Fixed at 2.44% for 5 years reverting to lender’s Standard Variable Rate (currently 4.50%, variable).

£999

4.0%

140% @ 5.50%

Yes

Available for remortgage applications only. This rate is ideal for those looking to secure a low rate which is available to portfolio landlords. This lender offers free legals and a free valuation on this rate. 2.64% 5 year fixed

75%

Fixed at 2.64% for 5 years (to 01/07/2023) reverting to lender’s Standard Variable Rate (currently 4.99%, variable).

£1,995

4.5%

145% @ 4.99%

Yes

Available for purchase and remortgage applications. If you’re looking to borrow 75% this product offers a very low rate and allows you to make a 10% overpayment of the outstanding balance per annum. Rates correct at 09/04/2018 Key: Rate: Initial interest rate period. LTV: Loan to Value. Lender Fee: Fee charged by lender for arranging the loan. Other fees will apply, please ask for details. APR: Overall cost for comparison. RTI: Rent to Interest calculation. ERC: Early Repayment Charge.

ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE FirstRate

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FirstRate Q2 2018  
FirstRate Q2 2018  

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