Some great rates available in the Buy to Let sector

At the time of writing, there is some quite serious competition in the Buy to Let sector!  Our good friends at Foundation Homeloans have just launched a 5 year fixed rate, sub 3.50%, with a 2% lender arrangement fee.  This is a really impressive move by the lender.  Not only that, but with Buy to Let properties, the mortgage is usually based on the rental achievable.  Lenders calculations vary but generally working on a rental income of 125% at a ‘stress test’ rate of 5%.  Foundation's product works on 125% of the actual pay rate (if you are purchasing in a Limited Company name).  This makes a huge difference in the amount of mortgage loan achievable.  Maximum loan allowed on this product is 75% of the property value. 

With Buy to Lets, the minimum deposit can be as little as just 15%.  At this level, there are only a few products.  With a 20% deposit, the numb er of products increases substantially, as do the options with a 25% deposit, and so on.   And rates are now so low that there's actually not a huge gap between Buy to Let rates and normal Residential rates, as there used to be. 

As the new taxation changes are implemented, we are seeing a lot more people purchase properties in a Limited Company name.  This sounds complicated, but any good property accountant will be able to advise you at the early stages if this is more beneficial to you, rather than buying in a personal name.   The most important thing is to ensure any property investment versus outlay gives you the best return possible. 

Finally, it doesn't matter whether you an experience landlord, or this is your first time.  Property ownership can be complicated, so explore all the options and shop around.  There are a huge number of lenders available to you and all have competitive edges and good criteria options for the right customer.  Make sure you understand everything at the outset so you don't regret it later! Always seek professional advice.

Buy to Let now with free valuation and free legals (including purchases*)

With the year end closing in fast, and new regulations only just around the corner, we are starting to see some lenders advising their plans for next year.  Many lenders have increased targets and AToM has been in contact with a number who are looking to launch or re-launch (having been dormant) during the coming months.  The majority of industry pundits, including myself, don't believe rates will now change until late 2016, or early 2017.  So with a slightly quieter market, competition, especially rates, should be fierce for the remainder of this year and moving into next year.  This can only be good news for the end consumer.

For those with Buy to Let / Investment property interests, we have seen new lender, Foundation Home Loans, stir up the market as they have launched products with free valuations, free legal costs and will accept customers who have no minimum trading period on employed or a self employed basis and no minimum income requirements.  This is in addition to looking at customers who may have had a blip or two on their credit history.  Although a recent new entrant to the market, Foundation have an appetite to lend and are innovative.  I think we will see a lot more from them in 2016.

Another lender has launched a five year fixed rate for Buy to Lets with a rate sub 4%.  This whole sector will remain buoyant while the rental market continues to grow at a substantial pace.

Nationwide House Price Index confirm UK house prices increased by 0.6% in October, with the annual price growth edging up to 3.9% from 3.8% in September.  The average house price now stands at £196,807!

And finally...due to an increase in business volumes, we’re looking for staff to join our expanding AToM team.  If you know someone in the mortgage sales sector, with the relevant qualifications (or studying towards them) and who likes to be kept very busy, then please ask them to get in touch! 

New entrants to the Buy to Let market!

With the rental market continuing to be buoyant, and with no signs of declining, the mortgage market is active as lenders recognise the huge demand for Buy to Let (investment property) mortgages.   These can be from a first time landlord, right through to the experienced House of Multiple Occupation (HMO) / Student Let portfolio investor.   Deposit requirements can be as low as just 15% and as this sector has also recently been through a price war, rates are competitive (some now sub 2%) and may also come with packaged deals, such as free valuation and free legal costs.

But with so many lenders now in this sector, rates may not remain the main area of competition for much longer! Some lenders are also reviewing criteria in order to attract new business.  Many lenders historically would not allow first time landlords, anyone earning an income less than £25k per annum, those who have more than ten properties, or those who may have had previous blips on credit history, to give you a few examples.

However, we have seen recently that criteria and attitudes are being relaxed and lenders are having to compete to attract more business.  There are also a large number of new entrants to this market including Foundation Home Loans, AXIS Bank, Fleet Mortgages and Pepper Home Loans to name just a few.  Each have launched their own niche propositions and are looking to attract a certain type of Buy to Let customer.

Buy to Let properties will often provide a modest monthly return over and above the mortgage payment.  The additional amount can be used to supplement income, or, with flexible mortgages, can be used to "overpay" the mortgage and reduce the term.

Most lenders in this sector will require the rental income to exceed the mortgage payment by up to 125%, normally at a marginal rate of circa 5% and, after costs such as managing agents, this should leave some spare cash to cover repairs, maintenance and landlords insurance. It should also enable a fund to be established to cover the mortgage payment in the event that there is no tenant in situ for a while. Remember that, whatever the deal, lender terms and conditions will always apply.

First Time Buyers, Contractors and New Lenders!

A fantastic product has been launched aimed at First Time Buyers.  The 95% loan to value product has a discounted rate for two years from the lenders variable rate and no lender arrangement fees on completion.  Comparing this to an average range  mortgage, this is a saving of around £1k.  The lender has no early redemption penalties so the customer can move away at any time and it has a £500 cash back.  This is a good entry product for those looking to get on the ladder with just a 5% deposit and great to see lenders are seriously looking to assist first time buyers positively.

Contractors have also been targeted.  For those working on fixed term contracts, who have a minimum of 6 months left on the current contract and a good history, it is possible to get up to 90% of the property value.  In the main, the lenders will work on daily rate, multiplied by five days and forty eight weeks to work out income.  This is then used in the lenders affordability calculations.  Some lenders have no early redemption penalties so the customer can move away at any time.

The newly launched Foundation Home Loans have already made some changes following their launch criteria on their Buy to Let offerings.  The specialist lender will now allow applications from customers who are in rented accommodation (but own other properties), have income from various sources (i.e. pensions, investments, etc) and deposits are now allowed to be gifted from immediate family members. All positive enhancements.

And, finally...having spent a fantastic day at the inaugural British Specialist Lending Senate at Brooklands Hotel last week, attended by over forty lenders, brokers and specialist mortgage packagers/distributors, I can safely say that this area of the market is set for huge growth over the coming months.  As volumes increase on the high street, more customers will be turned away and thus need the assistance of a specialist party to achieve their financial needs.  The computer says 'no' scenario is not a normal phrase within this sector as many lenders credit search rather than credit score.  Therefore human acceptance is the key to decision making on each case's merits rather than ticking a box on a computer screen.  This can only be a good thing for the end consumer and reiterates that there is life after the high street.

"Best time ever to take out a mortgage" say the Nationals

The national press were spouting some fantastic headlines last week.  Especially one who ran with a front page stating 'Best time ever to take out a mortgage'!  This of course was fantastic news for the lenders and also mortgage brokers, who were referenced in the article.  

But is it really the 'Best time'?  Ten year and five year fixed rate offerings are in abundance and the lowest I can remember.  What we are also seeing, and have done for some weeks now, is a fantastic rate price war on the high street.  For the right deal, right income, right borrowing percentage of the property value, we're looking at short term deals only just over the one percent mark.  If we'd have been told this would happen a year ago, we might have laughed in disbelief!  In addition, the Bank of England governor in a recent speech even alluded to a possible rate cut after suggesting inflation will become deflation, causing yet more stir across the market and pundits to push back rate rise estimations even further, well in to 2016.

So, there seems to be no right or wrong answer to the question ‘is it the Best ever time to take out a mortgage?'  There is only what is right for your individual circumstances and budgets.  One thing is for sure, rates will change and they are so daily currently!

Finally, AToM are delighted to announce the launch of a new specialist lender, Foundation Home Loans. With just a small number of launch partners, FHL will be offering Buy to Let products across the market with a number of niches including no minimum income requirements, some credit history issues considered, max age 85 at the end of the term, no credit scoring and no early redemption penalties on some products.  This is an exciting time and we welcome FHL to the market and look forward to working with them.