PROPERTY FINANCE

Finance is the life blood of anybody investing in or trading property.

Whether it’s buy to let mortgage finance, bridging or development finance or if you are wondering how best to release equity from property(ies) YPN’s resident expert Stuart Yardley covers every aspect of property finance in his monthly column in YPN.

Stuart also records regular video trainings for the YPN membership area where he discusses different aspects of property finance whether you are beginning to plan your financial goals in property or have an established property portfolio and are seeking commercial finance Stuart talks through lenders requirements, rates and timescales.

Check out one of Stuart’s Recent articles in Your Property Network below.

MORTGAGE UPDATE

The Buy-to-Let (BTL) mortgage market continues to grow with a few new specialist lenders entering into the market while other lenders continue to improve and enhance their BTL products.

Of the mainstream BTL lenders, BM solutions have reduced interest rates over the last month and have some competitive rates with low arrangement fees available.

They now have a 2-year fixed rate available at 75% loan to value (LTV) at 3.54%, with a 0.5% arrangement fee; and the same product at 2.59% when borrowing at 60% LTV. These provide good options for clients who are looking at a competitive rate with a lower arrangement fee added to the loan.

We have seen a new bank enter the market, initially providing products for lending in Southern England. Axis Bank has launched with a standard and specialist product range, offering mortgages to applicants on BTL properties, HMO’s, multi-unit freehold properties, and also for expats and limited companies.

The initial launch targets experienced investors with three or more BTL properties and I believe we will see this lender enhance and extend their criteria as we go through the year.

Key Lending Criteria

Lending area – London and the South East

A minimum of three existing BTL properties must be held, and a minimum of two years’ experience as a landlord

10-year interest only terms available

£75,000 minimum loan size

75% LTV

No minimum personal income

HMO properties accepted up to six bedrooms

Multiple units under one freehold accepted with up to five units in the freehold

Holiday lets accepted based on standard AST assessment

They have a range of fixed interest rates available at the moment on the specialist range for HMO’s, multi-unit freeholds, and limited companies.

For example:

2-year fixed rate – 4.29% – 1.5% arrangement fee added to the loan

3-year fixed rate – 4.39% – 1.5% arrangement fee

5-year fixed rate – 4.59% – 2% arrangement fee

As this is an initial launch I am sure the options will evolve but another lender option entering the market for experienced landlords is positive news.

Lower Rental Calculation

I thought I would also bring to your attention a few lender products available in the market with a lower rental calculation than the standard 5-6% of most lenders.

Aldermore are offering a 3.93% Term Variable Deal up to 75% LTV where you can use the pay rate for the rental calculations, and 4.48% up to 80%. This will allow you a little more borrowing against the traditional 125% at 5% calculations in the marketplace.

Some key features of their BTL criteria:

Low Credit Scoring accepted

Missed credit card and unsecured loan payments considered

CCJ’s and Defaults accepted if registered three years ago

80% LTV Purchase

80% Re-mortgage – including raising capital for debt consolidation and raising money to fund further BTL’s

Unlimited portfolio size for professional landlords

Maximum ten properties with Aldermore

Maximum age at end of term is 85, or 75 at application

Aldermore also offer a bridge to BTL product, allowing you to purchase the property and carry out any required works. You then have the potential option to re-mortgage the bridge on to one of their BTL products, and raise capital on the increased value as a result of the works carried out.

Kent Reliance are also offering a product with a lower rental calculation for experienced landlords with three or more BTL properties. This is on their range of 5-year fixed products and the rent will need to cover 110% of the pay rate for the product.

The standard BTL products available are:

75% loan to value – 4.59% 5-year fixed – 2% arrangement fee

80% loan to value – 4.79% 5-year fixed – 2% arrangement fee

85% loan to value – 5.19% 5-year fixed – 2% arrangement fee

If either of these products are of interest to you for any of your properties, please contact me and I will arrange a formal illustration for you.

Long Term Fix Watch

As I continue to see an increased demand for longer fixed rates, I have included below a snapshot of the longer term fixed BTL rates available.

LENDER

LOAN-TO-VALUE

PRODUCT

FEES

Coventry

65%

3.49% 5-year fixed

£1,995 arrangement fee

Free valuation and free legal service on re-mortgages

Santander

60%

3.29% 5-year fixed

2.5% arrangement fee

Free valuation and free legal service on re-mortgages

Virgin Money

70%

3.79% 5-year fixed

£995 arrangement fee

£500 cashback

Woolwich

75%

3.99% 5-year fixed

£1,999 arrangement fee

Free valuation and free legal service on re-mortgages

The Mortgage Works

75%

4.99% 10-year fixed

£995 fee

 

As always, I am available for a chat should you require any advice on BTL or residential mortgages, or commercial, bridging or development finance.

I work with investors all over the country, ranging from those buying their very first BTL to experienced landlords, so please give me a call or send me an email.

BTL Lending Trends in February

Source: CML

    • Gross BTL advances in February totalled 15,900 loans,  down 13% compared to January but up 11% compared to February 2014. These loans represented £2.2bn of lending – down 12% from January but 16% up compared to February 2014.
    • The number of BTL loans for house purchases was 7,400 in February, down 3% on January but 1% up on February 2014. These loans  represented a value of £900m, a decrease of 10% month-on-month but up 3% year-on-year compared to February 2014.
    • The number of BTL re-mortgage loans fell 19% in February from January to 8,400, but this was an increase of 23% on February 2014.
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