BM Solutions (part of the Lloyds Banking Group) have withdrawn their House to House product. What does this mean? Well, the majority of investment mortgages, or better known as Buy to Lets work on a required rental calculation. Most use a 125% rule. Therefore the rental payment must be 125% of the monthly mortgage payment, usually based on the actual interest pay rate. If the rental payment was short in calculation, then the loan offered would be reduced to fit.
The now defunct House to House product ignored this
requirement and looked at the Buy to Let using the customer’s income and
expenditure. It was one of the only
products in the market that offered this option and was incredibly useful for
properties where rental coverage did not cover the mortgage payments by the
required rental calculation. The lender
would consider the customers income when considering loan amounts.
The Mortgage Works (part of Nationwide) have also made a
number of changes to their Buy to Let offerings. These include the withdrawal of their
regulated Buy to Let offering. A
regulated Buy to Let is where a sizeable portion of the property is rented out
to a family member. They have also
withdrawn the option for clients to buy a property from a relative.
With property prices still low, First Time Buyers struggling
to get on the property ladder and returns on savings still relatively
unattractive, many have invested in property as a long term investment. This area of the mortgage market has been
buoyant and as such, many lenders are incurring service issues. So these are substantial moves by two major
lenders begging the question if this is the start of more negative things to
come? Let’s hope not!
No comments:
Post a Comment