Just an update Monday 25th March

Just an update

Monday 25th March

This week's headlines:

Two things to do regarding our Lender Fayre!

The countdown is on to Our Annual Lender fayre on Wednesday 10th April – now just over 2 weeks away.

Thank you to the 100’s of you who have already RSVP’d – this will officially be our best attended event yet!

Two things to now do…

1. If you have not yet confirmed your attendance, simply click HERE to RSVP. We will be closing this on the 25th March, so please click now.

2. For those attending, please visit our Conference web app to book your breakout group sessions. These are limited in size so to avoid disappointment we strongly recommend you pre-book. A list of each breakout is below. Visit HERE Or scan the QR code below

Breakout Groups:

Holiday Let Insight from Hodge

Emma Graham, business development director for mortgages delves into what's changing. Emma looks into how the balance between market appeal and economic influence is likely to shape the future of holiday lets and their owners.

Read the full article»

Coventry for intermediaries enhances affordability for landlords

Using the new calculations, a basic rate taxpayer receiving a rental income of £900 and opting for a 5 year fixed rate, could borrow £181,895 – previously £157,091 - subject to the 75% loan to value limit.

The reference rates are now as follows:

• 75% (previously 5.5%.) for 5 year fixed rates, for purchase and remortgage applications - OR product pay rate (whichever is higher)

• 5% (previously 5.5%) for 2 year fixed rates, for remortgages with no additional borrowing – OR product pay rate (whichever is higher)

• 5% (previously 7%) for 2 year fixed rates, for purchases and remortgages with additional borrowing – OR product pay rate +2% (whichever is higher)

The minimum rental income required is 125% or 145% of the monthly mortgage interest payments, based on the above applicable reference rate.

Brokers can easily find out the maximum loan amount, or the maximum rental income required, using the affordability calculators on the intermediary website.

Jonathan Stinton, Head of intermediary Relationships at Coventry Building Society, said: “Landlords help provide homes for those who are waiting to buy or simply not in a position to buy. Our affordability changes should help make it easier for new and existing landlords to finance their rental properties and help keep up with tenant demand.

“We try to make it as easy as possible for brokers to help their landlord clients, which is why we don’t ask for a minimum income – we simply look at rental income. Our Buy to Let calculator helps brokers easily see how much their landlord clients can borrow, and these new changes to our reference rate will likely mean many of those clients can borrow more if they need to.”

Bespoke Remortgage with Capital Raising from Bank of Ireland

Bespoke is Bank of Ireland’s personalised and flexible service for good quality complex cases. As long as your client meets Bank of Ireland’s 5 golden rules, one of its Bespoke underwriters will individually assess their case, taking a common sense approach.

Bespoke reason – self employed equity partner 9 months, loan £388,333 at 75% LTV

• Applicants were capital raising £179,838 for home improvements as they needed to adapt and extend their home due to disability. Prior to application the applicants had obtained all planning consents, drawings and quotes for the work along with timescales.

• One of the applicants had only been a partner in a law firm for nine months, however she was previously an employee with the firm and earning a similar level. We were able to get confirmation from the accountant of expected earnings and therefore we were happy to include her income as part of our assessment.

Bespoke reason – part interest only part repayment, loan £1,250,000 at 83% LTV

• Applicants were capital raising £337,000 for home improvements as they were building a two story extension and had obtained all planning consents, drawings and quotes for the work along with timescales.

• We agreed to lend at 50% interest only and 35% on repayment due to the high quality of the application, we also agreed to exceed our standard loan to value limits.

Bespoke reason – need to ignore school fees, loan £322,500 at 83% LTV

• Applicants were capital raising £67,500 for the deposit of a buy to let property.

• We agreed not to deduct the £1,417 per month school fees (payable for the next ten years) as a monthly outgoing for affordability as the applicants could evidence £180,000 in savings to cover these fees.

Bespoke reason – need to use 5% of Personal Pension, loan £1,314,495 at 75% LTV

• Applicants were capital raising £208,562 for home improvements on their residential property and to redeem their buy to let mortgage.

• One of the applicants had an undrawn Self Invested Personal Pension (SIPP) and was old enough to access this if needed. With evidence of the SIPP balance, we were able to include these as part of the total assessable income.

• We agreed to lend to age 75 with 60% on interest only and 15% on repayment.

Residential Capital raising criteria

Applicants can remortgage to raise additional capital up to 85% LTV (excluding fees) or 75% if there is any element of debt consolidation.

Applicants can borrow funds to raise additional capital to fund most legal purposes, provided the capital is not used for - business or speculative purposes (e.g., investment, replacing savings), payment of tax, gambling debts, a timeshare and payment of care fees.

Applicants can remortgage up to 90% LTV on a like for like basis or if they're repaying a Help to Buy loan in full, purchasing the final staircase on shared ownership or buying out someone from the title of the property (transfer of Equity).

Remortgages where the applicant has owned the property for less than 6 months are not normally acceptable. There are some circumstances where we can consider these applications (such as when an applicant has inherited the property or where a developer has taken the property as part exchange) so please contact us to provide details.

For enquiries to be considered they must meet the below requirements:

• One applicant must have a minimum income of £40,000

• Applications up to 90% LTV considered

• Applicants must fit our clean credit profile

• Must be applicants main residential home

• Minimum loan size £150k

• Applicants must be paid in GBP

• The property must fit our standard property criteria

We can also consider cases outside of our normal loan to value limits under Bespoke

Large Loans:

• 90% - £1m

• 85% - £1.5m

• 80% - £2m

• 75% - £2.5m

Metro Bank make LTV Enhancements

Metro Bank has made some enhancements to its residential maximum loan sizes, providing your customers with greater flexibility and choice.

Here’s what’s new:

• Maximum loans up to 90% LTV increased from £675k to £1.125m

• Maximum loans up to 85% LTV increased from £1m to £2m

(New Builds are still restricted to maximum loans of £1m at 85% LTV and £675k at 90% LTV).

For full details, please refer to Metro Bank’s Mortgage Lending Criteria Guide and Product Guides.

Review of of firms' treatment of customers in vulnerable circumstances

FCA will conduct a review into how firms are acting to understand and respond to the needs of customers in vulnerable circumstances, and share their findings by the end of 2024. FCA will conduct consumer research as well as gather information from firms and consumer representatives to make this assessment.

Click here for further information.

Consumer Duty: good practice and areas for improvement

FCA have published a Consumer Duty update which included:

• examples of good practice that FCA have seen and identified areas for improvement;

• A speech by Sheldon Mills; and

• The findings of their second implementation survey from Autumn 2023.

Click here for a summary of the update.

FCA to improve pace and transparency around enforcement cases

The FCA has committed to carrying out enforcement cases more quickly as the organisation seeks to increase the deterrent impact of its enforcement actions. As part of the new approach the FCA has begun a consultation on plans to be more transparent when an enforcement investigation is opened. Under the plans the FCA will publish updates on investigations as appropriate and be open about when cases have been closed with no enforcement outcome. Any decision to announce an investigation would be taken on a case-by-case basis and depend on a variety of factors which will indicate whether to do so is in the public interest.

Click here to read the consultation.

Therese Chambers, Director of enforcement at the FCA, also gave a speech setting out more details of the FCA’s new approach

Speech: Regulatory approach to deliver for consumers, markets & competitiveness

The key points in this speech by Nikhil Rathi, FCA Chief Executive, were:

• FCA will be pragmatic when looking at enforcement of the Consumer Duty, tackling breaches that pose the greatest risk of harm but looking favourably on firms that have made reasonable efforts to address concerns.

• FCA are not a price regulator and will not stand in the way of well-run businesses making profits in the face of effective competition.

• In dealing with motor finance claims, FCA have intervened now to establish the facts and are aiming for earlier clarity than previous redress events. The more quickly and comprehensively firms cooperate with requests for data, the sooner FCA can conclude their work.

• Firms and their investors need honest conversations about the balance between short-term shareholder returns and long-term investment to ensure medium-term competitiveness.

Click here to read the speech in full.