Posts with tag: buy-to-let finance

Number of Buy-to-Let Mortgage Deals Available Drops Slightly

Published On: October 23, 2017 at 9:26 am

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Number of Buy-to-Let Mortgage Deals Available Drops Slightly

Number of Buy-to-Let Mortgage Deals Available Drops Slightly

The total number of buy-to-let mortgage deals available on the market has dropped slightly over the past month, but remains at its second highest level since the recession in 2008, amid fierce competition between lenders, according to the latest figures from Moneyfacts.

There are currently 1,723 buy-to-let mortgage deals available, down from 1,725 in September, but significantly higher than the 1,477 products on the market a year ago.

However, this marginal monthly decline suggests that mortgage providers may now be holding back as they take stock of recent lending rule changes. Mortgage lenders are now required to apply stricter standards to portfolio landlords – those with four or more buy-to-let properties.

At the same time, the rates on buy-to-let mortgage deals are beginning to edge up.

The data from Moneyfacts reveals that, while the average buy-to-let fixed rate mortgage stood at a record low 3.15% in September and remained at that level when October’s figures were calculated, it has since started to creep up and, at the time of writing, stands at 3.17%.

This pattern can also be seen across the majority of terms and loan-to-value ratios (LTV).

For example, the average two-year fixed rate buy-to-let mortgage stood at 2.79% at the beginning of October, but has now risen to 2.82%. Meanwhile, the average three-year fixed rate has increased from 3.15% to 3.20% over the same period. Only the average five-year fixed rate buy-to-let deal remains unchanged, at 3.43%, yet, even then, it fell to 3.41% just a week ago and has since edged back up.

Could it be that lenders are preparing for a potential increase in the Bank of England’s base rate? It has been suggested that interest rates could soon rise from their record low 0.25% over the coming months.

Have you seen a decline in the number of buy-to-let mortgage deals available?

Keystone Joins TMA’s Mortgage Club to Give Access to Buy-to-Let Mortgages

Published On: July 11, 2017 at 9:17 am

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Keystone Joins TMA's Mortgage Club to Give Access to Buy-to-Let Mortgages

Keystone Joins TMA’s Mortgage Club to Give Access to Buy-to-Let Mortgages

Specialist lending brand Keystone Property Finance has joined TMA’s Mortgage Club, which will give members direct access to Keystone’s Classic Range of buy-to-let mortgages.

Aimed at landlords with typically more complex borrowing requirements, Keystone accepts applications from individuals, SPV and trading limited companies.

The Classic Range offers a selection of fixed and tracker rates at up to 80% loan-to-value (LTV), including products designed especially for Houses in Multiple Occupation (HMOs), multi-lets and blocks of flats.

David Whittaker, the CEO of Keystone, comments on the partnership: “We are delighted to join the panel of TMA Mortgage Club. We know that the Classic Range will prove particularly popular with brokers looking to place deals for their portfolio landlord clients, who will have to adapt to a changed buy-to-let landscape from October.”

Bank Aldermore released a guide on its new portfolio landlord rule changes yesterday, ahead of industry-wide changes introduced by the Prudential Regulation Authority.

TMA Mortgage Club members will be able to submit and track cases online, generate AIPs and mortgage illustrations, and keep a tally of all procuration fees earned with Keystone – all of which will save brokers valuable time and is great for record keeping.

David Copland, the Director of Mortgage Services at LSL Group, adds: “We are pleased to welcome Keystone and are confident that their specialist range of buy-to-let mortgages, which include HMOs, multi-units and limited company products, will be popular with our members and their clients.”

TMA Mortgage Club members will need to register with Keystone before they can begin transacting the range with landlords.

Just last month, Keystone reduced all of its rates on its Classic Range for buy-to-let landlords. Pricing now starts at just 3.59% for a three-year fixed rate mortgage at 65% LTV. Further details of the lender’s latest offerings can be found here: /keystone-reduces-rates-classic-range/

Limited Company Landlords Face Higher Mortgage Costs

Published On: July 10, 2017 at 9:51 am

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Limited company landlords face higher mortgage costs, so may not end up paying less in a bid to beat mortgage interest tax relief changes, warns broker Private Finance.

Lenders such as OneSavings Bank have reported increasing buy-to-let applications from limited companies, but research by Private Finance shows that any savings made by keeping mortgage interest tax relief may be exceeded by the higher costs of a mortgage deal for a limited company.

A limited company borrower can expect to pay 3.41% for a two-year fixed rate 75% loan-to-value (LTV) mortgage, compared with 1.91% for personal borrowers.

Mortgage application concept with house keys and calculator

Limited Company Landlords Face Higher Mortgage Costs

Analysis by the broker found that only landlords with multiple properties benefit from a limited company structure, with four properties being the tipping point.

Landlords looking to repurchase existing properties into a limited company are also likely to lose out, as this move triggers costly Capital Gains Tax (CGT) and Stamp Duty.

The research took a base salary of £35,000 and the average UK rental income of £11,010 from Zoopla to see what a landlord would owe on an average property worth £192,045.

Based on this scenario, a 75% LTV mortgage at 1.92% would cost a personal borrower £2,765 per year, while a limited company, at 3.41%, would pay £4,912.

The figures below show how savings are only made once tax relief can be claimed across four or more properties:

Two properties

Gross income (salary + rental income): £57,020

Annual mortgage interest costs: £5,531

Total tax bill: £10,902

Net income: £40,587

Three properties

Gross income: £68,030

Annual mortgage interest costs: £8,296

Total tax bill: £14,753

Net income: £44,981

Four properties

Gross income: £79,040

Annual mortgage interest costs: £11,062

Total tax bill: £18,604

Net income: £49,374

The Director of Private Finance, Shaun Church, says: “The option to invest through a limited company has come under the spotlight recently, as landlords look for ways to offset recent tax changes.

“But landlords shouldn’t rush into this assuming it’s a safe bet for saving money. Limited company mortgage products are available through a handful of smaller lenders, resulting in higher rates compared to personal borrowing. Investors need to drive down mortgage costs as much as possible to prevent this from eating into their profits.”

He suggests: “Larger landlords might find the tax benefits associated with limited company ownership outweigh the higher cost of mortgage borrowing. Each investor is different and there’s no one-size-fits-all solution.”

Nevertheless, the latest study by Mortgages for Business shows that limited companies accounted for 77% of all applications for buy-to-let finance in the first quarter of 2017 and 78% in the second.

Aldermore Releases New Guide on Portfolio Landlord Rule Changes

Published On: July 10, 2017 at 9:19 am

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Specialist lender Aldermore has released a new guide to help buy-to-let investors and mortgage brokers understand its underwriting variations ahead of more stringent, industry-wide portfolio landlord rule changes.

Aldermore Releases New Guide on Portfolio Landlord Rule Changes

Aldermore Releases New Guide on Portfolio Landlord Rule Changes

Portfolio landlords will now be divided into two categories in order to determine what further information must be provided to underwrite the individual case, in accordance with the bank’s new portfolio landlord rule changes.

For landlords with up to ten mortgaged buy-to-let properties with Aldermore, brokers must submit a portfolio schedule and business plan.

For those with 11 or more properties, additional documents will now be necessary, including a 12-month cash flow forecast statement, and a statement of assets and liabilities.

Landlords with 11 or more mortgaged buy-to-let properties with Aldermore, or total borrowing with the lender of more than £1m, will also be required to take part in a face-to-face interview.

Other checks will include portfolio affordability testing, rental income validation by postcode, and, where personal income is used, assessment of living costs and essential expenditure.

Aldermore’s portfolio landlord rule changes are being prompted by the Prudential Regulation Authority’s (PRA) decision to introduce more stringent affordability assessments for portfolio landlords – those with four or more properties – from September 2017.

The Commercial Director of Mortgages at Aldermore, Charles McDowell, says: “We recognise that there are big changes ahead, and, as a business, we have focused our attention to ensure that we and our brokers are best placed to meet these required changes.

“Having spoken to brokers, we recognise that lenders need to respond to the changes, as there is currently not enough support available for brokers who need to adapt. This is why we have created the guides, which we believe will help to provide the necessary information and support.”

He adds: “We want to assure our broker partners that we remain committed to the buy-to-let market by doing everything we can to support portfolio landlords when these changes are implemented later in the year.”

CML Revises its Buy-to-Let Forecast for 2017 and 2018

Published On: June 23, 2017 at 8:11 am

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The Council of Mortgage Lenders (CML) has revised its buy-to-let forecast for 2017 and 2018, which is down from previous expectations at the end of last year.

CML Revises its Buy-to-Let Forecast for 2017 and 2018

CML Revises its Buy-to-Let Forecast for 2017 and 2018

Its latest gross mortgage lending figures for May estimate that lending reached £20.1 billion. This is up by 12% on both April and May last year, in which £17.9 billion was advanced.

The CML’s buy-to-let forecast for 2017 and 2018 has been revised down from previous expectations at the end of last year, reflecting tax and prudential burdens in the housing and mortgage markets.

The organisation now expects buy-to-let lending of £35 billion in 2017 and £33 billion in 2018 – down from £37 billion in each year, which was forecast in December 2016.

The Director General of the CML, Paul Smee, comments on market conditions: “Remortgage activity and first time buyers continue to drive lending this year. Looking ahead, we expect to see this trend continue, but not as strongly, as the factors supporting lending are blunted by less favourable economic conditions.

“Buy-to-let had a weak start to 2017, and the sector’s contribution to overall net mortgage lending has fallen considerably over the last year.”

He continues: “While falling mortgage interest rates have helped support borrowing, tax and prudential measures are exerting pressure on the buy-to-let market. Following the distortion of the Stamp Duty change on second properties last year, we expected a slight recovery in lending levels. However, this has not materialised, and we therefore have lowered our forecast for buy-to-let lending this year and next.

“This re-emphasises the case for avoiding further changes to the tax and regulatory framework until the effect of these already in train have been properly assessed.”

Shaun Church, the Director of mortgage broker Private Finance, also says: “While it is good to see mortgage lending increase, the market remains sluggish, with remortgaging driving a substantial amount of activity. The home mover market continues to be dampened by changes to Stamp Duty and a lack of new homes coming onto the market.

“The latest forecast on the prospects for buy-to-let mortgage lending clearly demonstrates the damage that has been inflicted on the market by the Stamp Duty surcharge and the phasing out of interest rate tax relief. A healthy housing market requires a range of tenure types to support both buyers and renters.”

Keystone Reduces Rates on Classic Range for Buy-to-Let Landlords

Published On: June 14, 2017 at 9:06 am

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Specialist lending brand Keystone Property Finance has reduced all of its rates in its Classic Range for buy-to-let landlords.

The rates have been cut by ten basis points. The lender’s LIBOR has also been reset downwards, at 0.29%.

Keystone Reduces Rates on Classic Range for Buy-to-Let Landlords

Keystone Reduces Rates on Classic Range for Buy-to-Let Landlords

Pricing in the Keystone Classic Range now starts at just 3.59% for a three-year fixed rate mortgage at 65% loan-to-value (LTV). This product is available on standard buy-to-let property.

The range also includes options at 75% and 80% LTV, as well as rates designed specifically for Houses in Multiple Occupation (HMOs) and multi-unit blocks.

Keystone’s Classic Range buy-to-let mortgages are available to both individual landlords and those operating through limited companies.

Unlike most other lenders, Keystone accepts trading limited companies, as well as SPVs, as standard.

The CEO of Keystone, David Whittaker, comments on the reductions: “We are delighted to be able to accommodate a price cut within the Classic Range. Landlords using trading limited companies as borrowing vehicles will be particularly pleased with the reduction, as we are currently the only buy-to-let lender not to require a fixed and floating charge or debenture.”

Keystone Property Finance is an intermediary-only lending brand, and brokers must be registered to gain access.

We remind all landlords looking to take out mortgages of the Government’s recent and ongoing reduction in tax relief on finance costs – including mortgage interest.

A detailed guide from the Government on how the restriction will affect you can be accessed here: /government-guide-tax-relief-changes-residential-landlords/

We also reported yesterday that Together has launched a new, specialist buy-to-let range created to support landlords that are looking to expand their portfolios.

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