Posts with tag: buy-to-let finance

Paragon Mortgages Launches New Products for 2017

Published On: January 9, 2017 at 11:22 am

Tags: buy to let mortgages,buy-to-let finance,mortgage rates,mortgages,remortgage

Specialist lender Paragon Mortgages has launched new products for 2017, enabling landlords to plan their finances for the coming years.

Paragon Mortgages Launches New Products for 2017

The new products are available for both buy-to-let property purchases and remortgages. They benefit from current low market rates and offer an ideal opportunity for landlords who are looking to refresh and organise their finances in 2017.

The range of new products includes two and five-year fixed rate options.

The new five-year fixed rate products will be of particular interest to landlords looking for payment stability over the long-term, especially in the face of forthcoming changes to tax relief for individual landlords.

Paragon Mortgages will now offer a 3.75% five-year fixed rate option for landlords borrowing up to 75% loan-to-value (LTV).

Importantly, these longer term fixed rate products also feature interest coverage ratios starting at 125% and are graduated to reflect each landlord’s individual tax status.

Other highlights within the range of new products include a two-year fixed rate deal at 3.25% for lending up to 65% LTV, and another at 3.40% for lending up to 75% LTV.

The Managing Director of Paragon Mortgages, John Heron, comments: “The first quarter is an extremely busy time in the buy-to-let market, as landlords review their portfolios and plan for the year ahead.

“The tax changes being introduced in April make it more important than ever for landlords to think ahead and minimise costs where possible. These products offer landlords the opportunity to put in place longer term mortgage finance, whilst taking advantage of the beneficial impact of today’s record low market rates.”

The new products arrive as a leading mortgage broker reports that rates will come down for small-scale landlords this year, but could rise for those with larger property portfolios.

It seems that now could be an ideal time to expand your portfolios or review your finances for the coming years.

Mortgage Sentiment Improving, but Buy-to-Let Business is Down

Published On: December 14, 2016 at 11:43 am

Author: Em Morley

Categories: Finance News

Tags: buy to let mortgages,buy-to-let finance,finance,mortgages

Mortgage sentiment is improving, but buy-to-let business is down, according to Paragon Mortgages’ latest Financial Advisors Confidence Tracking (FACT) Index report, based on interviews with around 200 mortgage intermediaries.

The improvement in confidence arrives despite a reduction in the volume of business being written in the third quarter (Q3), with the latest data showing that the number of mortgages introduced per office has dropped from an average of 24.7 in Q2 to 21.8 currently. There has also been a corresponding drop in the average number of advisors per office, from 3.7 in the previous quarter to three in Q3.

Mortgage Sentiment Improving, but Buy-to-Let Business is Down

Confidence around future business has shown some improvement, however, following a summer of uncertainty caused by Government intervention in the buy-to-let sector and Britain’s vote to leave the EU.

Asked how much mortgage business they expect to complete over the coming quarter, more than third of intermediaries (34%) expect to do more business, compared to 7% who expect to do less. On average, intermediaries expect a 2.1% rise in business through the next quarter. In Q2, intermediaries predicted a 0.8% increase in business.

Sentiment in the buy-to-let sector remains mixed, however, following multiple Government and regulatory interventions. The proportion of intermediaries describing landlord demand as strong or very strong has improved, rising from 5% in Q2 to 9%.

However, 46% of intermediaries describe demand for buy-to-let mortgages as weak or very weak, suggesting that there is some way to go before sentiment recovers to levels recorded prior to recent Government announcements on Stamp Duty and mortgage interest tax relief.

Likewise, almost half of all buy-to-let business (44%) comprises remortgages, while just a quarter (25%) is for portfolio extension. This figure is down from 26% in the previous quarter, and 33% in Q4 2015.

A recent study by the Council of Mortgage Lenders paints a picture of the average UK landlord’s future plans: /cml-paints-picture-average-uk-landlord/

The Managing Director of Paragon Mortgages, John Heron, says: “While there has been some seasonal reduction in business volumes among intermediaries, there has also been a definite improvement in sentiment about likely future business. This comes on the back of a summer of uncertainty in the property market, and the economy more generally, following the vote to leave the EU.

“While any improvement in sentiment is to be welcomed, the latest data does indicate that confidence remains muted, especially in the buy-to-let market. Although intermediaries are reporting an increase in demand from landlords, a growing proportion of this demand is for remortgages, and buy-to-let purchases remain at low levels.”

He warns: “At a time of high demand for private rented sector properties, this dynamic could lead to reduced supply, higher rents and put greater pressure on the housing market.”

Paragon Refines Mortgage Affordability Criteria Ahead of Tax Changes

Published On: December 8, 2016 at 9:34 am

Author: Em Morley

Categories: Finance News

Tags: buy to let mortgages,buy-to-let finance,landlord taxes,tax changes

Specialist lender Paragon is refining its mortgage affordability criteria for buy-to-let landlords, ahead of landlord tax changes next year.

From 6^th April 2017, some landlords will face higher costs as a result of the reduction in mortgage interest tax relief.

Paragon Refines Mortgage Affordability Criteria Ahead of Tax Changes

While the tax changes will only be gradually introduced from April next year – and will not be fully implemented until April 2020 – Paragon is refining its affordability assessment now to ensure that its loans remain affordable in the future.

The lender is adopting an approach that seeks to assess the tax status of individual landlords and reflect this in the affordability calculation.

As a result, the interest coverage ratio (ICR) will not change for landlords who are unaffected by the tax changes. Those paying the basic rate income tax and corporate landlords will continue to be assessed at an ICR of 125%. If a landlord will be paying a higher rate of tax, an ICR of 140% will be used.

This revised approach to affordability also includes changes to the reference interest rate used in the affordability calculation. For all products other than longer-term fixed rates, the reference (or stressed) rate will be set at 2% above the product rate or 5.5%, whichever is higher.

For longer-term fixed rates, the current stressed rate of 4% or the product rate, whichever is higher, will be used.

All applications will continue to be subject to a background, forward-looking affordability assessment to ensure that products remain affordable when a fixed or discounted rate term comes to an end.

The Director of Mortgages at Paragon, John Heron, explains the need for the revised approach: “Government policy towards the private rented sector will increase costs for landlords, and it is clear that this will need to be reflected in lender affordability assessments.

“The Prudential Regulation Authority’s supervisory statement released in September this year is helpful in ensuring that lenders approach this in a consistent fashion.

“The changes that we’re announcing today are designed to tailor affordability to each landlord’s individual circumstances, whilst keeping the application process straightforward for brokers and their customers.”

Homeowners More than Twice as Likely to be in Arrears than Landlords

Published On: December 1, 2016 at 11:25 am

Author: Em Morley

Categories: Finance News

Tags: arrears,buy-to-let finance,homeowners,mortgage interest tax relief,mortgages

UK homeowners are more than twice as likely to be in mortgage arrears than landlords, according to Computershare Loan Services.

Homeowners More than Twice as Likely to be in Arrears than Landlords

The firm, which manages over half of all outsourced mortgages in the country, has found that just one in every 166 buy-to-let mortgages (0.6%) are currently in arrears by at least one month, compared to one in every 73 homeowner loans (1.37%).

Computershare’s figures also show a significant regional disparity, with Welsh buy-to-let mortgages almost ten times more likely to be in arrears than those in the East Midlands.

Residential loans in London are more than twice as likely to be in arrears than those in the South West.

The latest House Price Index from Nationwide shows that 90% of mortgages contracted in the past 12 months were on a fixed rate, due to historically low interest rates.

The CEO of Computershare Loan Services, Andrew Jones, comments: “When mortgages fall into arrears, problems can arise for borrowers, lenders and tenants, so loans must be administered in a way that takes into consideration the individual circumstances of every customer.

“Computershare Loan Services continues to lead the way in preventing and reducing arrears by using advanced analytical systems to predict problems and facilitating support for those who need it.

“For over a quarter of a century, we’ve done everything we can on behalf of clients to work with borrowers, particularly those significantly behind on their payments, to find a solution that takes into consideration their circumstances.”

The firm currently services over £71 billion in mortgages and loans, which represents over half of the outsourced mortgages in the UK.

It’s good news for landlords, who appear to be on top of their mortgage payments. However, many will be apprehending the forthcoming reduction in tax relief on finance costs, which will be gradually introduced from 6^th April 2017 and will affect around one in five investors.

The Government has provided a guide on how the change will affect you: /government-guide-tax-relief-changes-residential-landlords/

Guides for Landlords on Limited Companies a “Great Success”

Published On: November 29, 2016 at 9:59 am

Author: Em Morley

Categories: Landlord News

Tags: buy-to-let finance,guides for landlords,limited companies,limited company,mortgage interest tax relief

Foundation Home Loans’ guides for landlords on setting up limited companies to hold their property investments have been hailed a “great success”.

Guides for Landlords on Limited Companies a “Great Success”

The specialist buy-to-let lender, which helped to pioneer the use of limited companies in the buy-to-let sector, has been delighted with the response to their guides from landlords and their advisers.

The guides for landlords, which are freely available on the firm’s website, explain the ease of setting up a limited company, what is required to run one, and how to close one down.

Quarterly data from one of the UK’s leading specialist brokers, Mortgages for Business, shows that limited company structures for buy-to-let accounted for 63% of all purchases. The move to this vehicle arrives on the back of tax changes from the Treasury, announced in July 2015.

According to Foundation Home Loans’ Business Development Director, Paul Brett, the guides have been created to show advisers and landlords that a limited company can be set up in 15 minutes or less and will help to beat the damaging tax changes.

From April next year, the amount of tax relief that landlords can claim on mortgage interest and other finance costs will be restricted to the basic rate of tax. The Government has created its own guide on how the change will affect you: /government-guide-tax-relief-changes-residential-landlords/

Be aware that the change will be gradually introduced, and will be fully operational in April 2020.

Brett says: “Clearly, our guides have had a very enthusiastic reception. They were developed to help advisers and landlords understand that the limited company route is not difficult.

“Since the Treasury’s announcement of tax relief changes, we have worked tirelessly to ensure that introducers, their clients, and the wider market can be confident and benefit from using a limited company as a positive and legitimate means of managing their properties in the most tax efficient way.”

How many landlords are thinking of setting up limited companies due to the tax change? These guides may be able to help!

Remember that we provide exclusive guides for landlords on the many legal obligations and responsibilities that you have when renting out property: /guides/

A Year of Two Halves for Buy-to-Let Borrowing

Published On: November 25, 2016 at 11:34 am

Author: Em Morley

Categories: Finance News

Tags: buy-to-let borrowing,buy-to-let finance,buy-to-let sector,mortgages

It’s been a year of two halves for buy-to-let borrowing, according to the latest financial results from Paragon Mortgages.

A Year of Two Halves for Buy-to-Let Borrowing

The firm reported a strong performance across all of its business lines in the year to October, contributing to a 9.1% increase in underlying profits, totalling £146.9m.

The Director of Mortgages at the group, John Heron, comments: “This was very much a year of two halves for buy-to-let, with very strong completion levels being seen in the run up to the Stamp Duty increase in April, followed by a commensurate reduction in activity levels across the market from April.

“However, our pipeline of new business is now gathering momentum with an increase of approaching 20% in October. Much of this is due to the success of Paragon Bank in providing us with diversified funding, allowing us to deliver a series of competitive products, which is driving an increase in application volumes.”

He continues: “In particular, we are seeing an improvement in the professional landlord segment of the market, a sector we are well positioned to satisfy, given our extensive experience of meeting their individual requirements.

“Whilst the buy-to-let market has had a challenging year, we continue to see the potential the sector has to offer. With strong rental demand, there will continue to be a growing need for professional landlords to provide quality private rental accommodation and, with our 20 years’ experience in the market, we remain very well positioned to work with these landlords.”

While buy-to-let borrowing may have had a mixed year, how has the rest of the market fared?

The British Bankers’ Association (BBA) has also published its High Street Banking Statistics for October.

It found that house purchase approval numbers are 10% lower than in October last year, while they’ve dropped by 4% in the first ten months of the year when compared to the same period of 2015.

However, the Chief Economist at the BBA, Dr. Rebecca Harding, says: “Mortgage approvals ticked up a little October. There has only been a relatively modest increase in activity since the Bank of England cut rates in August.”