Posts with tag: PRA changes

Landbay Reports Record Buy-to-Let Lending in September

Published On: October 2, 2017 at 10:11 am

Tags: buy to let mortgages,mortgage lender,mortgages,PRA changes

Landbay Reports Record Buy-to-Let Lending in September

Digital mortgage lender Landbay has reported a record month for buy-to-let lending in September, with a total of £6.31m lent across 31 mortgages during the month.

September’s lending levels were higher than the two previous months combined, due in part to both swelling inflows through the Innovative Finance ISA and mounting institutional investment on the peer-to-peer lending side, combined with a broadened range of intermediary partners on the borrower side.

As the Prudential Regulation Authority (PRA) introduces fresh regulation on the buy-to-let mortgage market, Landbay feels that it is in a strong position to capitalise on what is fast becoming an increasingly professional and specialised buy-to-let market.

The PRA’s new underwriting rules have caused a number of mainstream lenders to reconsider their commitment to the buy-to-let lending market in recent months, but this has played into the hand of specialist lenders like Landbay.

The momentum of lending in September is expected to continue into the fourth quarter (Q4) and beyond, as portfolio landlords and their brokers look to specialist lenders to support them through the more restrictive lending environment.

As Landbay approaches its fourth birthday, it has now lent a total of £59.56m to professional landlords across the UK, with zero defaults, arrears or late payments to date.

The CEO and Founder of the lender, John Goodall, says: “Over the past four years, we have invested a lot of time and money into building a platform that we can be proud of; one that provides a competitive source of funding for professional landlords, a credible opportunity for investors, and is able to scale quickly to meet growing demand for specialist buy-to-let lending.

“Like any fast rising new entrant, we’ve experienced some growing pains along the way, but our track record speaks for itself and we now have all the building blocks in place to support continued expansion of the company.”

Lenders Now Enforcing New Rules on Portfolio Landlords

Published On: October 2, 2017 at 8:56 am

Author: Em Morley

Categories: Landlord News

Tags: mortgages,portfolio landlords,PRA changes,remortgaging

Lenders Now Enforcing New Rules on Portfolio Landlords

Lenders are now enforcing new rules on portfolio landlords under the Prudential Regulation Authority’s (PRA) changes to underwriting standards.

The Bank of England’s (BoE) PRA has imposed stricter lending criteria for portfolio landlords – defined as those with four or more buy-to-let properties.

As of 30^th September 2017, lenders have put new rules in place when lending to portfolio landlords investing in new properties or remortgaging their existing investments.

We have created a free, handy guide to help you understand how the new rules might affect you: /landlords-guide-pra-portfolio-underwriting-changes/

The changes mark phase two of the PRA’s new underwriting standards for buy-to-let, in an attempt to curb lending to those investing in rental properties. The first phase, which was introduced earlier this year, involved stricter affordability tests for all landlords.

Now, the PRA is requiring changes to the way that lenders underwrite mortgage applications for portfolio landlords, in a bid to improve the level of mortgage arrears rates associated with large property portfolios.

If you are looking to take out a new mortgage or remortgage your existing properties, you will be required to pass specialist affordability checks under the new rules.

Although the PRA has not outlined a specific requirement for lenders, it has advised that they should take the following into account: a landlord’s experience in the buy-to-let sector; their whole property portfolio; their rental income; any outstanding mortgages; and their assets and liabilities. Your historic and future expected cashflow will also be assessed.

When the time comes to apply for a new buy-to-let mortgage or to remortgage a property, you should be prepared to present the following: an up-to-date property portfolio spreadsheet; a business plan; cashflow forecasts; your last three months’ bank statements; submitted tax returns; and potentially your income and expenditure statements for your portfolio.

For this reason, we recommend getting all of your paperwork in order now and speaking to a financial adviser if you believe you’ll be affected by the new rules.

Some Landlords may be Banned from Lenders under new Rules

Published On: September 27, 2017 at 9:31 am

Author: Em Morley

Categories: Finance News

Tags: mortgages,portfolio landlords,PRA changes,underwriting changes

Some landlords may be banned from certain lenders under new mortgage lending criteria from the Prudential Regulation Authority (PRA).

From 30^th September 2017, landlords with four or more mortgaged buy-to-let properties will be subject to stricter lending criteria when remortgaging or taking out a mortgage on a new property.

Some Landlords may be Banned from Lenders under new Rules

The new rules mean that lenders will have to take a landlord’s total income versus borrowing across their whole property portfolio into account. This change is designed to ensure that borrowing on any new properties does not have a negative impact on the landlord’s ability to repay loans on other properties within their portfolio.

Currently, lenders assess a landlord’s application based on the rental income and value of the property they are lending against. The new regulations will mean that, not only is the property being lent against considered, but also the rental income, geographical spread, value and any loans across all properties in a landlord’s portfolio.

The new rules will only affect a very small proportion of landlords, as many either own their properties outright or have fewer than four properties. Data from UK Finance shows that just 11% of the UK’s 1.9m landlords own four or more properties, while an even smaller amount use mortgages to finance their investments.

Only those with poor cash flow or a high number of properties in one geographical location should be concerned. This highlights the importance of obtaining regular and up-to-date rental valuations, to ensure that your properties are marketed at the correct prices. And, for those with multiple properties in one location, seeking expert financial advice before the changes come into force is advised.

The stricter criteria mean a lot more work for lenders, which could result in them refusing to offer mortgages to landlords with large portfolios.

The main impact of these changes on landlords will be the time it takes for a mortgage application to go through. With all of the additional considerations for lenders, it’s recommended that you allow a minimum of three months for the application to be processed.

However, the new rules are likely to mean that landlords will have a more limited choice of lenders and products to choose from when it comes to purchasing a new property or remortgaging an existing one.

It’s also advisable that you check that your current lender will be continuing to offer their services to portfolio landlords and, if required, whether you can refinance with them in the future.

The changes also highlight the importance of keeping up-to-date, detailed records for all of your properties. This way, when the time comes to remortgage, you will have all of the information needed for your application to hand. This should include: your current mortgage value; rental income; outgoings; and rental profits, along with tax returns for all of the properties you own.

If you have not done so in the past six months, now is definitely the time to review your portfolio and any associated mortgages, to ensure that you are on the best possible rate, making the maximum amount of profit and, most importantly, won’t run into any difficulties in financing or growing your portfolio in the future.

Together Explains its Changes for Buy-to-Let Portfolio Landlords

Published On: September 22, 2017 at 9:42 am

Author: Em Morley

Categories: Finance News

Tags: mortgages,portfolio landlords,PRA changes,property investors

Together Explains its Changes for Buy-to-Let Portfolio Landlords

Together has confirmed its continued support for buy-to-let portfolio landlords ahead of the Prudential Regulation Authority’s (PRA) underwriting changes, which will be implemented from 30^th September 2017.

The specialist lender has explained the changes that it plans to introduce for buy-to-let portfolio landlords – those with four or more mortgaged buy-to-let properties – who are subject to the new PRA regulations.

From 29^th September, the loan-to-value (LTV) across a customer’s portfolio must not exceed 75%, including mortgage-free properties.

Together will apply an overall portfolio interest coverage ratio (ICR) for customers who have had arrears on any mortgage or secured loan in the past 12 months, and will require proof of income, although, if there are no secured arrears, then this will not be applied.

The lender has updated its property schedule document to capture whether properties are tenanted and the repayment type of existing mortgages. There will also be two additional questions on Together’s broker portal, My Broker Venue, to find out how many mortgaged buy-to-let properties the customer currently owns and the length of time the customer has been a landlord.

Richard Tugwell, the Intermediary Relationship Director at Together, says: “As the buy-to-let sector prepares for further changes, it’s likely that we’ll see a move towards specialist lenders like ourselves that can offer the flexibility and personal approach that will be needed in many portfolio landlord cases. At Together, we have updated our processes to help make it as easy as possible for brokers to adapt to the changes, and applied our usual common sense approach.

“Earlier this year, we enhanced our buy-to-let product range, and we’ll be continuing to review both our products and processes as the changes come into effect. We have a specialist buy-to-let team responsible for underwriting these applications, and our roving underwriters and business development managers will provide any additional support that brokers may require.”

All new applications by buy-to-let portfolio landlords to Together will be processed in line with this new criteria from 29^th September 2017.

Make sure you’re ready for the PRA’s changes.

Foundation Home Loans Open for Business for Portfolio Landlords

Published On: September 15, 2017 at 9:28 am

Author: Em Morley

Categories: Finance News

Tags: buy-to-let mortgage,mortgages,PRA changes,underwriting changes

Foundation Home Loans has confirmed that it will continue to provide its range of competitive mortgage products to portfolio landlords ahead of new underwriting changes.

Foundation Home Loans Open for Business for Portfolio Landlords

The lender has outlined its portfolio lending proposition for intermediaries ahead of the 30^th September 2017 deadline for the new Prudential Regulation Authority (PRA) underwriting standards.

Overall, there is very little change to the lender’s approach and underwriting criteria. Keeping the data requirement for background portfolios to a minimum, Foundation Home Loans will verify key data points electronically.

Background portfolios must have:

A maximum aggregate portfolio loan-to-value (LTV) of 75% – this is calculated across the whole portfolio, including unencumbered properties.
A minimum aggregate rental cover ratio will be 125% – stressed at 5.5%.

Intermediaries will continue to access Foundation’s existing products via its easy to use online system, where they can now upload details of the portfolio from a spreadsheet.

As before, borrowers may have unlimited background portfolios and finance up to £2m with Foundation. The lender provides a competitive product range for individuals and limited companies, and recently launched a House in Multiple Occupation (HMO)/multi-unit block product.

With Foundation’s products, there is no minimum income and no minimum period of employment or self-employment.

The Director of Marketing at Foundation, Jeff Knight, says: “Our research, undertaken amongst intermediaries and portfolio landlords, highlighted a need for a proposition that is simple and pragmatic – something that has always been at the heart of our approach. Therefore, we have not had to change much at all and will continue to provide a straightforward proposition to intermediaries.

“Indeed, portfolio landlords already represent around 50% of our business, so, unlike other lenders, this is very much business as usual for us and our intermediary partners.”

At the same time, the lender is increasing its maximum loan size across its buy-to-let range – a move made in response to increasing demand.

With immediate effect, the maximum individual loan size will increase to £1m for loans up to 65% LTV. For loans up to 75% and for HMOs, the maximum loan size remains at £500,000. There is no change to pricing.

Knight comments: “We have been receiving an increasing demand from intermediaries for larger loan sizes, so this is a simple move in response to that. As a growing specialist intermediary lender, we will continue to identify ways to expand our product proposition to the market.”

Half of Buy-to-Let Brokers still Unaware of PRA Changes

Published On: September 12, 2017 at 9:35 am

Author: Em Morley

Categories: Finance News

Tags: buy to let mortgages,portfolio landlords,PRA,PRA changes

Almost half (46%) of buy-to-let brokers are still unaware of all they need to know about the upcoming PRA changes (Prudential Regulation Authority) for portfolio landlords, found new research from Kent Reliance, which is part of specialist lending group OneSavings Bank (OSB).

Half of Buy-to-Let Brokers still Unaware of PRA Changes

The PRA changes, which were announced in September 2016, will see a new minimum underwriting standard being introduced for landlords with four or more mortgaged buy-to-let properties from 30^th September 2017.

Under the new rules, portfolio landlords – and their brokers – will need to provide detailed information on the cash flows and costs arising from multiple tenancies.

However, with less than a month to go until the deadline, the survey of more than 200 buy-to-let brokers found that 46% still don’t understand everything they need to. One in ten (13%) admitted that they were aware of the changes, but not when they are coming into effect, while nearly a third (31%) had heard of the new PRA changes, but didn’t fully understand how to apply them to their business, and just 2% hadn’t heard of them.

Those brokers that are already in the know are optimistic about the opportunities that the new framework will create. A third (29%) believe the PRA changes will increase future opportunities, compared to 14% who think that they will reduce overall buy-to-let transactions.

Whatever the eventual outcome, some teething pains are expected. A third (29%) of brokers anticipate that more applications will be rejected in the short-term, a quarter (23%) believe that the extra administrative burden will cause the application process to slow down, with just 4% predicting that it will have no impact at all.

Adrian Moloney, the Sales Director of OSB, says: “Brokers have had to get to grips a with a huge amount of regulatory change over the past 18 months, including seismic changes to mortgage tax relief and Stamp Duty, so it’s understandable that some are still playing catch up, but, with the PRA deadline looming, now is the time to buff up on the new rules and make sure clients are ready to comply.

“For those that still don’t feel confident in what these changes mean for their business, the time to get on top of it is now, and we would encourage them to contact us as soon as possible so we can make the transition into the new landscape seamless for their business.”

Are you ready for the new rules?