Andy Young, at Property Hawk Mortgages says:
Professional landlords play an important role in the Private Rented Sector, owning a majority of the UK’s rental property and, according to research by Paragon Mortgages, have an average of 13 properties in their portfolios.
It can be very frustrating for many professional landlords to find that a significant number of buy-to-let lenders have restrictive aggregate lending policies, which means they cannot access their products.
For example, Leeds Building Society and Natwest will not lend to anyone with more than 4 buy-to-let properties in their portfolio and BM Solutions will only lend on up to 3 properties with the Lloyd’s Banking Group. Some lenders also place restrictions on income that is solely derived from rent, which can further reduce the options available to professional landlords.
In essence, it seems that a lot of the mainstream lenders are looking for the same customers who are employed, have a minimum income of £25,000, a large deposit and a standard buy-to-let property that fits the rent stress test. These same lenders shy away from property investors with too much exposure in the buy-to-let sector, despite their significant experience in running a successful rental property business.
So who is catering for the professional landlords?
There are a number of specialist buy-to-let lenders including Paragon Mortgages, Kent Reliance and Fleet Mortgages who offer product ranges aimed mainly at professionals. Kent Reliance is a popular choice as it has no aggregate lending limit and also provides buy-to-let mortgages up to 85% LTV. These lenders also provide finance for HMOs, limited companies and student lets.
There are also two unique and innovative buy-to-let schemes currently available that are aimed at professional landlords who wish to expand their property portfolio.
Shawbrook Bank is demonstrating its willingness to think outside the box with a scheme that can provide up to 100% funding for a new buy-to-let property. For landlords with an existing property portfolio, a buy-to-let mortgage of up to 75% LTV is provided by Shawbrook Bank for a first charge on the new buy-to-let property.
Alongside this first charge, existing properties in the portfolio (either residential or buy-to-let) can be used to provide additional security via a second charge to Shawbrook Bank. The interest rate is the same for the first and second charges.
Property Hawk Mortgages also has a product called the Buy-to-let Equity Withdrawal Scheme available via Castle Trust. It is an equity loan, secured via a second charge, of up to 20% of the property value and up to 85% LTV including the primary mortgage. There are no monthly repayments, which means there is no additional rent stress test. The loan is repaid at redemption, along with a share in any growth in property value over the term of the loan.
With a maximum LTV of 85% and no stress test, an existing client can increase their LTV and use the capital raised to expand their portfolio.
It is great to see more lenders looking to provide solutions for professional landlords, although further development in this area would be very welcome.
IMPORTANT! Due to current market conditions, lenders are withdrawing and replacing products with little or no notice.
Please check our website regularly to see the most up-to-date products available.
Please check our website regularly to see the most up-to-date products available.
Tel: 029 2069 5446
Your home may be repossessed if you do not keep up repayments on your mortgages.
The Financial Services Authority does not regulate some forms of mortgage.
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