Inform 12th July 2024

United Trust Bank

Case Study

The case where a flexible approach on an unusual property was something to admire.

You may have heard how great we are for interesting Interest Only cases. But as you know, the proof of the pudding is in the eating, so grab yourself a spoon and tuck into this bowl of interesting Interest Only deliciousness.

This recently completed case illustrates our common sense approach and flexible lending criteria…

A single applicant wanted to borrow £175,000 to purchase a beautiful stone house for £600,000 in the heart of Scotland. The applicant was divorced and close to retirement age however expressed that he loved his job and intended to work until he was 80 (at least!).

Although he had missed a utility bill payment, we were comfortable with his borrowing for several reasons. Firstly, the case was a low LTV and our borrower held a significant number of shares in his employer’s business where he has worked for more than 10 years. In addition, he also had some other assets which could be used as the repayment vehicle at the end of the term. Affordability was also assessed on the interest only monthly repayment as opposed to other lenders who use the capital and interest repayment figure.

Got an interesting Interest Only case that you want to place? Call us today on 0207 031 1551 or email us at mortgage.enquiries@utbank.co.uk

ZURICH

Latest Platform Updates

We’re focused on delivering changes that are designed with you in mind, ensuring we make it as easy and rewarding as we can for you and your client’s when it comes to doing business with us.

This month we’ve:

• Extending terms acceptance to 120 days
• Improving your notifications
• Improved our communications with you
• Improved support for your clients
• Annual IP tax bands updates for 2024/2025

For more information about these updates, please continue reading here.

Melton Building Society

You said, we did!

At Melton for Brokers, we have been extremely busy enhancing not only our systems with a new Broker Portal but improving our criteria and service too.

Feedback plays a vital part in ensuring our continuous quest for improvement, so when our brokers talk, we listen – whether it be from our broker surveys or general feedback from conversations with our people, we take on board each and every idea and query.

This month’s blog talks about the enhancements we’ve made of the back off these conversations and how we can help turn more blips into DIPs!

Melton’s New Broker Portal from Mast

Let’s first talk about our new Portal – It’s no secret that brokers are busier than ever and a simple, smooth & instinctive system makes lives easier and the application process simpler for all involved.

Our new Portal from Mast has been live since April and although some elements are still in the

build phase, all application journeys are available now and some of the benefits include:

• A simple form on one page that auto-saves
• Live criteria warnings that pop up as you go through the form
• Live packaging requirements depending on the application type
• Direct messaging with the Underwriter
• A payment link to send to the customer
• Auto decision and 24-hour referral time to help us understand those tricky cases where needed

Criteria Enhancements

Enquiries are proving to be less & less straight-forward these days and vanilla cases are a rare

flavour in the new normal.

With the Pandemic and then more recently the cost of living crisis, it appears peoples needs and circumstances have changed – some have fallen into difficulty and have some form of adverse, whereas others have had a career change or even started a second job.

Whatever it may be, we as Lenders need be versatile and have the ability to be agile – which is a key focus of ours at Melton Building Society.

So, what have you as brokers ‘said’ we should do, that we have now ‘done’?

• Increased our maximum loan size across all LTV bands
• Introduced a residential large loans range up to £2.5m (max 75% LTV)
• Launched an ERC free self-build product
• Reduced our minimum loan for Shared Ownership cases to £75k
• Increased BTL leasehold LTV from 60% to 75% LTV
• Reduced our BTL stress rate to help with affordability
• Made Interest Only available on fixed-rate products

These small tweaks to criteria and latest product launches compliment our already diverse range of niche criteria and innovative products.

So why use Melton Building Society?

Product Ranges

• Residential up to 95% LTV (inc NB
• Shared Ownership 95% of share
• Self-build range up to 75% LTV
• BTL range including Standard, Holiday, Consumer & Family BTL
• Credit Repair range up to 70% LTV for secured missed payments, CCJ’s, defaults, IVA/DMP etc

Criteria Niches

• No credit scoring on prime range
• Manual Underwriting approach
• Earned income used to age 80 for non-manual job roles
• FTB/FTL & non-owner occupiers
• BTL affordability based on rental
• No min income on Interest-only
• Self-build direct specialists

Want to know more?

To find out more about our products and criteria, visit our website themeltonbrokers.co.uk and register today for all our latest news and product launches.

Have a case to discuss? Call our dedicated Sales Team on 01664 414144 (option 1).

Vida Homeloans

In case you missed it – June 2024

Metro Bank

Limited Company Buy to Let Launch

Limited Company Buy to Let highlights

• Maximum 75% LTV
• 125% of the mortgage interest amount calculated at our standard Buy to Let stress rates
• Up to four Directors/Shareholders accepted. They must be the same people and have 100% shareholding
• No minimum income (subject to rental void plausibility checks) but at least one Director must be earning an income (other than rental)
• Portfolio landlord accepted – maximum of 10 properties with Metro Bank (under £10m aggregated debt), maximum of 10 properties in total
• Maximum age 85 (mortgage term based on the oldest applicant)
• Limited Company must be non-trading and must be limited to solely holding residential property and not engaged in wider activities (must be an SPV). Acceptable SIC codes:
  • 68100 – Buying and selling of own real estate.
  • 68209 – Letting and operating of own or leased real estate.
  • 68320 – Management of real estate.

Please ensure you or your customer verifies the solicitor firm is on the Smoove panel and that the firm handling the application is able to process limited company buy to let mortgages before submitting.

Our Buy to Let calculator has been updated in line with these enhancements – use our Buy to Let calculator to find out how much your customer could borrow.

For full details, please refer to our Mortgage Lending Criteria Guide and Product Guides.

Metro Bank Talks… Limited Company Buy to Let (20 minute webinar)

Following our exciting launch into Limited Company Buy to Let, we will be hosting our next webinar series focusing on the buy to let market, what opportunities this will bring your customers and ultimately, the Metro Bank solution.

Metro Bank Talks… Limited Company Buy to Let

Thursday 18 July | 9.30am – 9.50am: Register now

Thursday 18 July | 2pm – 2.20pm: Register now

Tuesday 23 July | 9.30am – 9.50am: Register now

Tuesday 23 July | 2pm – 2.20pm: Register now

Paymentshield

The extension boom: are your clients properly protected?

In 2023, almost 300,000 homes in England were granted planning permission by district level planning authorities, according to the Department for Levelling Up, Housing and Communities.

The appetite for home extensions and outbuildings such as garden offices has risen since the pandemic. Despite the recent dip in UK house prices, the market is still incredibly tough for would-be new home buyers – with lenders continuing to raise rates coupled with issues such as gazumping on the rise. For many, extending a property is the best solution to get that sought-after extra space.

It’s useful, then, for advisers to be in a position to confidently inform their clients on what the implications of extending or adding outbuildings might be for their home insurance.

There are four things to consider:

• Does the customer need to notify their home insurance provider if they are undertaking significant work at their property?

This all depends on the policy.

Paymentshield doesn’t require new or existing customers to notify them about whether their property is undergoing renovation or extension works. This means that they cover properties during the work, providing eligibility criteria continues to be met (for example, the property will continue to be occupied).

Many other standard home insurance policies will require the insurer to be notified. The insurer will then determine if cover can continue or whether additional, specialist cover is required, and any impact on price. Advisers should recommend that clients check their terms and conditions and the information they have provided thoroughly to determine if any planned works needs to be disclosed – else risk a claim being declined.

• Is the property going to be unoccupied while work takes place?

If the homeowner moves out during renovation work and the house is left empty, this could impact a claim.

For example, Paymentshield home insurance policies have an unoccupancy period of 60 days. If a customer is looking to take out insurance for a property that will be unoccupied for over 60 days from the policy’s start date, then the customer wouldn’t be eligible to buy a Paymentshield policy. In this instance, advisers can help their clients by recommending a specialist policy.

If an existing policyholder leaves the property unoccupied for more than 60 days, then certain exclusions will apply until the owners move back in. For example, loss or damage caused by escape of water or oil is excluded, as is theft, and accidental damage to buildings and contents.

Different insurance policies are likely to have a different definition of ‘unoccupancy’, with differing limitations and exclusions. This means it’s important that advisers establish whether there is intention to do any major renovation works on the home. Customers need to know in advance that their cover could be reduced so they can source a specialist policy if needed, instead of getting caught out if they need to make a claim during a period of unoccupancy.

And, at the time of purchasing the initial policy, the different unoccupancy periods and any associated limitations can be an important factor in comparing policies, if the homeowner is planning to undertake work immediately. Advisers can help them to carefully consider this.

• Have they added or removed a bathroom?

If an extension includes a new bathroom, wet room or toilet, it’s vital that the insurance provider is informed as it may change the property’s risk profile.

Every year, home insurers typically pay out more for damage caused by leaking or burst pipes than any other claim type. More bathrooms (and more pipework) increases the chance of damage occurring and needing to make a claim. So, it’s vital the insurer is aware, and that the customer is paying the right price for their situation – meaning no problems should the client need to claim.

• Will it cost more to rebuild?

Has an extension significantly increased the square footage of the property? If yes, it may cost more to rebuild if the property is damaged beyond repair.

If the client’s home insurance has a blanket sum insured, they should check the total limit will provide enough cover after an extension/renovation work on a property.

The alternative is a sum insured policy where the customer will have selected the specific cost of rebuilding their property. In this situation, the client will need to check their policy documentation to ensure the buildings sum insured remains accurate, and possibly update it to avoid the risk of underinsurance.

It’s also worth checking that contents cover is still appropriate. That extra space is likely to have led to the acquisition of more furniture and other items that could mean contents cover needs increasing.

Making sure that homes and belongings are adequately protected during and after extension or renovation works is not necessarily straightforward, and advisers are really well placed to help clients navigate that. After investing in enhancing what, for most people, is their primary asset, homeowners will want to make sure it’s properly protected.

If you would like to discuss your clients’ insurance needs as they consider making changes to their properties, Paymentshield has a wealth of resources available for you to download and print in their Marketing Toolkit including guides, tools and case studies for your use. Visit the Paymentshield Marketing Toolkit page and take a look around.

The Mortgage Lender

Economic Update – July 2024

We’ve teamed up with 4most Economic Consultants to provide you with a monthly economic update. The update for July is now available to download.

The update covers:

• Inflation and interest rates
• Labour market
• Housing market
• Rental market
• Mortgage market activity
• Rate analysis

Read the update 

Home Plus from e.surv

A faster, smarter way to move forward with confidence

Leeds Building Society

Mortgage Product Updates

Aria Finance

10 Days to rescue a self-build dream

Aria Finance recently delivered a bespoke bridging loan solution in just 10 days, allowing our client to seamlessly continue their self-build journey.  The client was running out of funds for their self-build project; their family home was due to go on the market very soon however several large defaults and some missed payments on a credit card meant that traditional finance options were unavailable for our client.  Our strategic intervention not only provided crucial financial support but also ensured the client’s self-build project stayed on track.

Read the case study in full to find out more

Legal and General

Five reasons to recommend our Critical Illness Cover

We understand that choosing the right Critical Illness policy is important for your client and their family. That’s why we’ve fine-tuned our protection to make it a good choice, as illnesses, health and demands change. Here are five reasons to choose our cover that’s in tune with life’s changes:

1.    A market leader for cancer coverage – Two-thirds of our claims are cancer-related and we know that clients are coming to you with concerns about cancer cover. So, we’ve added cover where it’s needed.

2.    Their full pay out, plus a little extra- Our additional payments protect your client’s lump sum, as it would still be paid in the event of a valid claim for one of our specified critical illnesses.

3.    Cover for the school years and beyond- We don’t stop cover the moment your child leaves full-time education. We cover kids until they’re 22 with Critical Illness Cover, or 23 with Critical Illness Extra.

4.    Support for young and old, today and tomorrow- Wellbeing Support provided by RedArc Assured Limited and Care Concierge begin on day one for the whole family and Wellbeing Support extends six months beyond the claim. Not just when serious illness happens.

5.    No cut-off period for claiming on cover- There’s no cut-off period for making a claim*. So, your clients can concentrate on putting their recovery first.

*A claim can only be made if diagnosed during the policy term.

Find out more

Landbay

Resilient HMOs in the UK property market

Amid the ongoing housing shortage, there is sustained demand for well-maintained and properly managed Houses in Multiple Occupation (HMOs). Our recent survey of landlords reveals continued confidence in this type of property, with some expanding their portfolios and treating HMO management as a full-time career. The hotspots for our HMO landlords are London and the South East, followed by the East Midlands.

Managing HMOs comes with its challenges. However, 30% of the landlords surveyed owned an HMO property or portfolio. Of these, 72% owned their HMO properties through a limited company. Half of these landlords relied solely on their property income without having another job.

Self-managing landlords need to be cautious. There are many pitfalls for the unwary, and having a thorough understanding of the local market is crucial. Prospective investors must do their homework. Some councils, eager to control HMO supply, are introducing additional licensing schemes for smaller HMOs (defined as properties where at least three unrelated tenants live together). Large HMOs, defined as houses occupied by five or more unrelated people, always require a licence unless an exemption is granted, regardless of location. However, these additional schemes often target specific parts of a town or city.

Councils can also regulate HMO stock through an Article 4 Direction. While planning permission is always needed to convert a single dwelling into a seven-plus-bed HMO, it is usually not required for HMOs accommodating up to six people. However, Article 4 Direction removes these permitted development rights in certain areas. This means that potential HMO landlords in these locations must also apply for planning permission for smaller HMOs. Approvals are only given if the accommodation meets high standards.

Landlords might face tests such as the ‘sandwich’ test, where permission is usually denied if creating a new HMO would result in an existing residential property being flanked by HMOs on both sides. When permission is granted, the property might also need licensing, even if it houses fewer than five occupants.

Regularly checking for the application of Article 4 Directions is essential due diligence for prospective HMO landlords. This includes monitoring council plans to implement or amend these directions. Following recent local elections, we may see more councils introducing licensing regimes and Article 4 Directions, and we will keep a close watch on these developments.

Despite the complexities of managing a portfolio, our survey found that nearly half of the properties were self-managed by landlords. Among these, a third owned portfolios with over 20 properties. Only 19% of HMO landlords used property management companies, while a quarter employed estate agents.

The preference for a DIY approach is likely linked to the popularity of smaller HMO portfolios. The most common portfolio size was between 4 and 10 properties, accounting for 34% of the total. Portfolios of 20 or more properties made up 31%, while those with 11-20 properties comprised 22%.

Other positive news in the sector includes decreasing utility bills, which lead to higher net rentals and make it easier to borrow significantly against the property’s value. Additionally, council tax banding for individual rooms in shared houses has been reversed, meaning HMOs will once again be classed as single dwellings.

As our survey indicates, the HMO sector remains resilient and has many positive aspects. It will be interesting to see how the Labour government addresses this market, if at all. However, as long as investors conduct thorough research before committing, HMOs can yield excellent returns.

Explore our full range of HMO products here