Criteria Changes to provide greater flexibility to landlords
The new criteria effective from 15th December are:
- The re-introduction of a maximum loan size of £2m – up from £1.5m
- Maximum LTV of 65% on our standard and limited company Buy to Let product ranges. This is not applicable for properties which are above or adjacent to commercial premises, or HMOs or multi-unit blocks (MUBS).
- For both HMO and MUB landlords, we are also reducing the time the primary applicant for the mortgage must have owned a standard Buy to Let, HMO or MUB property down from 2 years to 1 year.
These changes are the first of several criteria enhancements we will be making so watch out for further announcements in the New Year, and in the meantime, in the lead-up to Christmas, we are providing advisers with daily hints and tips on our product range, criteria and service offering with our 12 Days of Christmas postings on our social media channels.
Simplify the pre-completion process further
Foundation Home Loans now accept ‘No-Search Indemnity Insurance’ for purchase and remortgage transactions, with the exception of purchases and/or re-mortgages of HMO and MUB properties.
Solicitors can place the policy on risk at Completion in lieu of Local Authority and or other Searches, considerably speeding up the conveyancing process to completion.
Local authority searches normally are a critical part of the property transaction. They give information on the land on which the property being mortgaged is built and the immediate surrounding area/location. Without these searches, the owner could be liable for future costs and legal challenges on matters, for example, such as Public Rights of Way, planning permission and Building Control Works including extensions, and in extreme cases could mean that the value of the property is affected negatively.
Recently, Local Authorities have struggled to deliver the results of local authority searches due to the very high demand for Local Authority searches, driven by both staffing issues caused by Covid-19 lockdown and the flood of purchases being transacted prior to the Stamp Duty Reduced Rates Deadline of March 31st 2021. Some have been taking more than 40 days1 to produce the search results, which means the process of buying a property has become very lengthy for many buyers.
Foundation continue to simplify the mortgage process wherever possible, to support you in getting as many of your clients as possible to completion before the March 31st Stamp Duty Reduced Rates Deadline.
Additionally, during the Covid-19 period only, in relation to purchase transactions where Local and other searches have reached their 6-month maturity, Foundation will also accept Search Expiry Insurance.
If you would like to discuss a case, please contact your Regional Account Manager today
You’re looking to the future with confidence
The specialist lending market is standing firm against the challenges posed by the coronavirus outbreak – and is looking to the future with confidence, the latest research from Masthaven shows. Results from the specialist lender’s Broker Beat survey of more than 250 brokers found that you continue to be resilient – despite all that 2020 has had to throw at us.
Key findings:
- 71% of brokers confident about the market prospects
- 87% confident about their company’s prospects
- Economic uncertainty named as biggest challenge
While it’s far from plain sailing and there will be challenges ahead, Masthaven said brokers’ optimism should give lenders and customers greater confidence in the market as we go into 2021.
“As the pandemic continues to wreak havoc on the finances of people across the UK, brokers will be key in helping many people who no longer fit the model of a ‘vanilla’ borrower unlock affordable finance. Looking ahead, tough economic conditions and a potential no-deal Brexit may mean more challenges ahead. However, knowing that brokers are optimistic about 2021 should give lenders and customers greater confidence in the market and provide an opportunity for the market to expand and innovate further.”
Rob Barnard, Director of Intermediaries, Masthaven
Recognising that life is rarely straightforward, Masthaven’s range of lending products are designed to meet the needs of people underserved by the high street. There’s no box-ticking and no credit-scoring – just real people looking at the human being behind the application.
Free Buy to Let client guide – What you need to know
With interest rates at record lows and property prices on the rise, your clients may be weighing up property investment. Help them understand the pros and cons of landlord life.
Download our free guide on Buy to Let mortgages that you can send direct to your client
LV= protection webinar recordings and the programme for Q1 2021!
The LV= protection webinars have been hugely popular during 2020 – we’ve seen over 10,000 attendees during the year for advisers to refresh their LV= product and proposition knowledge. Before the 2021 programme starts, you can catch up on some of the 2020 webinars here.
In 2021 we’re kicking off the programme straight away with three webinars in the first week – two on Income Protection and one covering our menu plan the LV= Flexible Protection Plan. You’ll find at least one webinar on most days in January and February, with a mix of skills-based and product know-how together with some topical technical updates. All aiming to help support you in the current environment, and to ensure you’re best placed to recommend LV= to your clients.
All our webinars are eligible for CPD points, so why not register your place in our flexible programme and learn more about LV=.
Meanwhile to find out more about the LV= Protection proposition, please contact your account manager, visit the LV= adviser centre or call us on 0800 678 1890.
Is lockdown causing more people to consider lifetime mortgages?
Lifetime mortgage clients’ priorities may have changed due to the coronavirus pandemic. With more clients needing to support day-to-day living or helping family members, they could be looking to access more funds.
The Just For You Lifetime Mortgage J6 LTV series could help.
To learn more, please read our case study.
Can Teachers’ bridge the gap between the old and new home?
Teachers For Intermediaries is always doing things differently to offer mortgages to those that don’t meet the ‘tick box’ of standard lending criteria. Our expert team can offer a bespoke approach whether it’s people, property, or importantly the timing of a purchase that needs it…
Here we explain how a high net worth couple were able to purchase their dream home without selling their existing property first thanks to our short term mortgage with no early repayment charges:
THE CASE
Having found a dream farmhouse with separate cottage on a 2.5 acre plot in rural Shropshire, the customers had decided to make the purchase straight away, and deal with the sale of their existing home at a later date.
They calculated a 3 year mortgage term would allow them sufficient time to update the new property and also to refresh and then sell their former home. With the customers’ substantial employment earnings paid in US Dollars, we needed to consider other income sources to cover mortgage repayments on the new property.
OUR SOLUTION
The couple asked for the majority (70%) of borrowing against the new property to be interest only. After investigating the value of their current home and working out monthly income available from pension and investment assets, we approved the requested 80% loan to value against the new home.
The couple’s plan to sell their former home and clear the loan against the new home in full at the end of the 3 year term justified a split of 70% interest only and 30% repayment. This approach also helped to free up monthly income to invest in improvements to both properties over the loan period.
Ralph Punter, BDM at Teachers For Intermediaries, said –
“Getting the sale of one home and purchase of another to converge can be tricky, and dealing with unusual homes, at higher values, in more rural locations or with additional features can compound that difficulty. Borrowers can sometimes need long enough time to complete remedial property work on both homes and to allow for a gradual moving process. Realistically the timescales could run to a couple of years to do things properly, making a short term mortgage with no early repayment charges the best option.”
Access Video on trusts and helping clients
Parents generally want to protect their assets and make sure their children can benefit from those assets in the future. But there are many things that can jeopardise those assets. In this week’s video we explain how setting up a trust can help many clients protect their assets and make sure their children get what they deserve.
Trusts are very helpful and can even help with Inheritance Tax issues but remember giving advice on services you are not experienced with can get you in trouble. Don’t put yourself at risk, use our expertise in the field.
Our fully qualified advisers are dedicated to Equity Release and will ‘own’ and see your case through personally from initial contact through to smooth completion; no ‘case handlers’ in the back office to deal with at Access Equity Release – if you want the swiftest route to your equity release completions and prompt commission payments, speak directly with;
Des O’Hara, Adviser Development Manager – dohara@accessequityrelease.com, 0333 443 9829
Martin Wade, Director – mwade@accessequityrelease.com, 0333 443 9825
Advance notice of maximum finance to Value increase to 80%, changes to Countries Checklist and ID Requirements
Maximum FTV Increased
We are writing to give you advance notice that the maximum finance to value is being increased to 80% from tomorrow, Wednesday, 16 December 2020 on most Buy-to-Let and Home Purchase Plan products (MUFB’s and International HPP products remain at 75%). All other aspects of our current range of Buy-to-Let and Home Purchase Plan products remain unaffected and can be found here.
There have also been a number of important changes to the underwriting criteria of both our BTL and HPP products. These include:
Home Finance Applications – Countries Checklist
We have amended the list of countries where Gatehouse Bank can accept finance applications from, details of which can be found here.
Gatehouse ID Requirements
Documentation can be submitted in either colour or black & white certified copies, provided the content meets the requirements and the applicant’s address is visible on all requested documentation. Details of the new requirements can be found here.
Our teams remain available to deal with your queries via phone and email, details of which can be found here.
NatWest Green Mortgages
According to a poll from Ipsos MORI, 85% of UK citizens are concerned about climate change and 52% are very concerned.
To help reduce climate change, lenders are doing their bit to refine their product offering and reward customers who purchase energy efficient homes.
Green Mortgages are a timely implementation, according to UK Government National Statistics, residential properties make up 15% of the UK total climate emissions. It is important the mortgage industry does what they can to help to lower this and reward customers who are trying to do the same.
A growing choice of products for customers
A recent study conducted by IMLA found that 74% of lenders are expecting growth in the green mortgage market in the future, with 13% having already seen a rise in customer interest for green mortgages since the start of the COVID-19 crisis.
IMLA also highlighted that 29% of lenders suggested they plan or have already launched a green mortgage product, which shows that lenders are reacting to this increased demand from their consumers.
The Government is also playing their part in the green homes initiative, after they announced the Green Homes Grant Scheme, which launched in September.
Property owners are be able to apply for a grant to make energy efficiency improvements to their homes, with the grants covering at least two thirds of the cost of any improvement work, up to a value of £5,000 per household. Customers who undergo such home improvements will be putting themselves in a good place to be accepted for a green mortgage
What are NatWest doing to help?
At NatWest, finding a greener solution to our processes and the way we operate is of paramount importance to us. In line with the plan laid out in the Paris Agreement in 2015, our current focus involves:
- Stopping lending to and underwriting companies with more than 15% of activities related to coal, unless they have a credible transition plan by the end of 2021
- Stopping lending to and underwriting major oil and gas producers unless they have a credible transition plan in line with the 2015 Paris Agreement by the end of 2021
This activity underpins our ambition to be a leading bank in helping to address the climate challenge, by making our own operations net carbon zero in 2020 and climate positive by 2025, and by driving material reductions in the climate impact of our financing activity.
NatWest Green Mortgage Products
Our Green mortgage products are available to all intermediaries for residential property purchases. There must be a valid Energy Performance Certificate (EPC) listed on the relevant registers with a rating of A or B to be eligible.
Properties where there is currently only a proposed or anticipated EPC Rating of A or B are not eligible.
For more information on our green mortgage proposition, click here.
Stamp duty cliff edge
The stamp duty holiday announced in July for properties up to £500,000 in England provided a welcome boost to the housing market allowing it to make a recovery from the effects of the coronavirus pandemic. The cost saving incentive has certainly had an impact and resulted in increased activity in the purchase market, including buy-to-let properties.
However, the surge in mortgage applications is not without its problems, with some lenders being overwhelmed with new business and delays occurring with conveyancing work as solicitors try to deal with the increased demand on their services.
The deadline of 31st March 2021 when the stamp duty holiday is due to end means that time is running out for anyone looking to take advantage of it. Recent research found that the average time for a property purchase, from finding a property to completion is taking at least 14 weeks as processing times have doubled due to the high demand.
At TBMC, we only deal with buy-to-let mortgage applications, but we have heard warnings from the home moving industry that some purchase transactions are taking up to 5 months to complete, which means that the window of opportunity of getting a mortgage for property purchases that avoid paying stamp duty may well be closed.
There has been concern throughout the industry that having a hard deadline for property purchases to complete may cause some transactions to fail at the last hurdle, especially as the current Help to Buy scheme is also due to end on 31st March.
For example, prospective first-time buyers may not have enough savings to cover the 3 per cent stamp duty charge if it was suddenly payable when they are due to exchange contracts on their new home. This could then cause a breakdown in the property chain, causing unintended but drastic knock-on effects in the housing market.
There have been calls by the home moving industry for the stamp duty holiday to be extended by another 6 months and to have a tapered ending to avoid creating a cliff edge scenario for buyers. This would then release the pressure on all parties involved in property purchase transactions and encourage the housing market to continue its recovery beyond the 31stMarch deadline.
Whatever happens with the stamp duty deadline, it is important for mortgage lenders and brokers to be supportive of each other during this period of increased demand for finance. It may seem sensible to submit cases to lenders as quickly as possible, but it is just as important to make sure that they are fully packaged, with all the required documentation, in order to ensure the application can be processed without unnecessary delays. Equally it is vital that lenders are transparent about their current turnaround times so that brokers and their clients have realistic expectations for offer and completion dates.
After all, we’re all in this together.
Leek United 2020 Improvements
Leek United are continuously looking for ways to improve processes, products and criteria to ensure that you can place a case with them as quickly and easily as possible. Whilst 2020 has been a challenging year for all, they have maintained their commitment to deliver new improvements for their intermediary partners.
From the beginning of the year, the Society has made various changes, including:
- Introduction of intermediary product transfers, with a proc fee!
- Online mortgage offers available on their intermediary portal
- New and improved affordability tool
- Specific products for Regulated and Non-homeowner BTLs
- Virtual meetings available with a dedicated BDM
- Lower minimum property value of £50,000
- Virtual webinars and training sessions
Intermediary Mortgages Team Manager, Laura Allcock, commented:
‘We understand the work involved when introducing a mortgage and want to make the process as simple and easy for intermediaries as possible.
I’m very pleased that we were able to deliver key improvements, in what has been a challenging and very unpredictable year. We look forward to further enhancements to our products and services in 2021. I’m also delighted to announce that at the beginning of December, we expanded our team of BDMs to ensure that the service we continue to deliver is outstanding.’
CHRISTMAS HAS COME IN NORTHERN IRELAND
We are nearing the end of what has been an extraordinary year. Last December, we never would have anticipated that the speed of change we’ve seen in the housing market over the last six months would be more than in the last six years.
Recovery has been stronger than expected. Some sectors are doing well; fortunately, the housing market is one of them, managing to bounce back and adapt to a new normal, along with the help of government support too.
House prices and economic growth follow a close relationship. We have seen huge appetite for property and experienced some of our busiest months on record for new applications. As we see lockdown measures easing again, alongside the recent Covid-19 vaccination news, at last, some form of revival seems to be likely.
At Kensington, we have tried to keep in line with recent market optimism. After our successful launch in Scotland two years ago, we are pleased to announce our latest launch into Northern Ireland – which has also come at a perfect time ahead of our 25th birthday! We’re proud to be the first specialist mortgage provider to enter this market and the only specialist provider to now operate across the whole of the UK.
Although a small market, the Northern Ireland mortgage space has been growing over the last few years and is also home to a rising population of self-employed workers, new business owners, and entrepreneurs. However, despite this growth, the market has not kept up with the evolving needs of these borrowers, who do not fit traditional lending criteria. The space is largely occupied by high-street banks and building societies – so there is an opportunity for us to provide specialist, flexible solutions that do not currently exist.
Submitting business with Kensington in Northern Ireland
If you are looking to submit business with us, we recently launched our new broker portal where you can register online as an intermediary or a broker admin.
You can find more information on criteria and the Northern Ireland market on our dedicated landing page: www.kensingtonmortgages.co.uk/intermediaries/NorthernIreland and be sure to follow us on LinkedIn for our news and updates.
REFLECTIONS ON THE EQUALITY ACT 2010
The tenth anniversary of the Equality Act 2010 is a useful prompt to consider the current implications for insurance.
Top tips! Get your Limited Company case submissions right first time
We’re here to support you and your BTL clients and understand how tricky Limited Company case submissions can sometimes be. That’s why we’ve included these tips from our underwriters, to make your Limited Company client applications an absolute breeze.
Top tips for you…
When submitting Limited Company cases, remember:
- To input the correct SIC Code. Relevant SIC Codes are: 68100, 68209 and 68320
- All directors must be named on the application
- We allow up to a maximum of 4 Directors providing at least 60% of shares are held and the company has been set up for the sole purpose of buying, selling or managing residential property
- All portfolio landlords must provide a Business plan, Cashflow Statements and Property Schedule. All templates can be found on our website.
Don’t forget to double check our our easy-to-follow Application Submission Guide or give our expert BDMs a call.
Get in touch with our BTL experts today
Call 0370 707 1894 Mon to Fri 9am to 5pm
