Is it time to take a fresh look at Buy To Let Loans?

If you are a mortgage broker, IFA, or indeed an introducer of finance leads, you will no doubt face a deluge of packagers calling you on a daily basis offering you their wares.

Each call a different shade of drab grey until come the end of the week you’ve experienced fifty different shades of the same grey prattle. Fifty shades of grey that have as much excitement and sex appeal as a Dulux grey colour chart, with nothing to skip a heartbeat, race a pulse or twitch a hormone.

Same old “I want to build a rapport with you.”… “Did you know that secured loans are an alternative to remortgages?”… “Use our software meaning you never need to speak to a human again to do business”… “Did you know rates start from 5 point whatever” … “blah, blah, blah”…

Most of these characters broker Buy to Let deals, neglecting to run the product under your keen eyes because secured loans are the bread and butter for them, but here we are seeing a massive upturn in Buy to Let introductions. We actively market every call for them…but why?

You wouldn’t introduce your standard TMW/Paragon/BM/Aldermore client, neither would we want them, we are very much looking for the non conforming client. Are they out on stringent affordability? Do they have adverse credit? Is the property defective or an HMO/Multi-Let that doesn’t meet lender criteria?

Introductions range from purchases, refinances, even second charges in order to raise deposits for further investment properties.

Let me give you an example:

I discussed a client who had several investment properties with a mortgage broker. The broker was shooting the breeze with me on the guy, telling me he was fine for the first charge as the client was prime. Of course, the broker was deeply content to have such an upwardly mobile client, “the gift that keeps on giving” is a client  hungry to expand his portfolio. This client even had the deposit in cash! Cash sat in his bank account to the tune of £60,000. “why not raise the £60,000 as a second charge against one of his buy to lets?” says I.

The brokers’ initial thought was “why when he has the cash?” Having worked out that the client could offset the charge from his income tax return lowering his tax burden the broker was keen to proceed. So…less tax, and £60,000 to invest elsewhere, what a no-brainer!

Suffice to say after a turnaround of 4 days with our lending partner Masthaven and a deposit of £3000 into his bank account, our broker was very happy indeed!

A similar case followed, imagine his surprise when we placed a deal with Blemain on interest only where the client had 4 mortgage arrears on another property in a 12 month period? Having explained that Blemain ignore other mortgage conduct in favour of the security property conduct, the deal executed again in a mere 4 days! Guess what? The broker was another £3000 richer!

To make matters better, affordability is calculated on the tenancy agreement on the security so the flexibility is there for clients who find it difficult to prove income.

To summarize:

• adverse mortgages ignored
• tax benefits to clients raising finance instead of sacrificing cash
• affordability based on tenancy agreements NOT personal income
• seconds and firsts available.
• 50% and 60% yields on broker fees

Is this of use to you?

call liam on 02921 670060 with your next deal, or in his absence call one of our professional advisers on 0800 0542066