Mortgage News

This is a sticky topic.
  • Filter
  • Time
  • Show
Clear All
new posts

    TMW are not on that list but they don't require sa302.
    Perhaps its because they are part of Nationwide it wasn't felt necessary to list? (In which case why separately list BM, Godiva etc?)


      It is difficult to answer that question but I will find out and revert with an answer.


        Originally posted by sam_cat View Post
        Always read it, rare that I have something to add so stay quiet. Its a great insight into whats going on and I do look forward to these posts from yourself.

        Thanks again.
        I'd like to echo that - rarely is there anything to add or question, but I always appreciate the update and insight.

        I opine and comment on a number of issues, but am wrong from time to time.
        It's always nice to have an actual expert in the place...
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).


          Hi Boletus
          I have checked with TMW and they do indeed accept the Tax Overview Document in support of the Self Assessment. This level of underwriting requirement normally only applies to those with more than 3 mortgaged properties and where the underwriter is seeking comfort in the reasonableness of the application.
          I have suggested that it would be of help if they were to notify HMRC that they do in fact accept this document.


            Please excuse the length of this posting and in all probability the contents of which will already be known to seasoned Landlords but it is perhaps a timely reminder of what lies ahead from 1st April 2018 (Def Not April Fool) and the latest announcement from a significant lender within the BtL market is quite relevant.

            The rules for landlords change on the 1st April regarding the energy efficiency of their properties.
            The rules for landlords change on the 1st April regarding the energy efficiency of their properties. Coventry BS are the first lender that I am aware of that is going to press on their stance following this change:- Coventry for intermediaries announces changes to its BTL policy ahead of the new EPC rules The rules on EPC ratings are changing. From 1 April 2018, it will be against the law for landlords to grant a new tenancy in England and Wales to either new or existing tenants if the property doesn’t have an Energy Performance Certificate rating of ‘E’ or above. This means that some lenders won’t lend on privately rented properties that fall below an ‘E’ rating unless the property has a valid exemption from the regulation. “We’ve been hearing some concerns from brokers about how this will affect new and existing clients,” said Kevin Purvey, Director of Intermediaries at Coventry for intermediaries. “So we’ve sent out an email this week explaining the changes and telling them how we’re responding to them.” From 15 March, Coventry for intermediaries will update its BTL lending policy. It won’t lend on properties in England and Wales that fall below an ‘E’ rating, but will continue to accept applications if the privately rented property has a valid exemption. If a client already owns a property* with an ‘F’ or ‘G’ rating, they’ll need to carry out ‘relevant energy efficiency improvements’ to bring it up to an ‘E’ or above. Green Deal finance may be available to help with the improvements. Exemptions to the regulation may apply in certain circumstances but landlords must be aware that it’s their responsibility to request one. For more information on the new EPC rules:


              I am detailing research undertaken and published by the bank of Ireland into Buy to Let activities amongst those with up to ten Buy to Let properties , without question it makes very interesting reading.

              The latest changes in the buy to let market for landlords with small property portfolios

              05 March 2018


              Login to submit and manage your cases.

              Looking at the latest research into the buy to let market, a lot changed during 2017 for landlords with small portfolios (up to 10 properties). Here, we look at the latest findings relating to the last quarter (Q4) of 2017, which provide interesting insights.
              Buying and selling activity

              Activity in this sector is high, with a quarter of small landlords buying new properties in Q4, while a fifth sold property. This trend looks likely to continue in 2018 with 24% planning to buy, while only 10% intend to sell. This makes this category considerably more active than for landlords with larger portfolios, as they are twice as likely to buy in the coming year.
              Funding with a buy to let mortgage

              Of those planning to buy, 58% plan to fund it with a buy to let mortgage, while a quarter plan to use a ‘permission to let’ arrangement on a standard loan.
              Interest only mortgages are still the most popular buy to let mortgages with 59% funding their properties this way.
              Most landlords are expecting the rates from their mortgage lender to rise with increases in the Bank of England base rate, and this may impact buying behaviours over the coming year.
              Popularity of buy to lets

              There are three main reasons small landlords invest in property:
              1. Wanting to increase income
              2. Believing property offers a better return than other investments
              3. Retirement planning.
              Property is still an attractive investment option, and while many also have full-time jobs, some are looking for rental income to allow them to reduce their working hours or leave their day job entirely.
              Types of tenants

              Small landlords tend to avoid renting to high risk groups such as students or those receiving local housing allowance. They tend to rent to “safer” tenants, such as families and young couples. In Q4, 46% rented to families with children, a group which is finding it harder to get onto the property ladder themselves.
              Small landlords continue to be less susceptible to having periods where properties are empty than larger landlords. The most common reason for empty periods was the changeover between tenants, followed by the need to carry out maintenance on the property. 69% of small landlords had tenants for the whole of Q4 giving them a stable income.
              The impact of recent tax changes

              42% of small landlords have some form of borrowing, so are likely to be affected by tax changes which came into force in April 2017.
              As a result of these changes, a quarter have transferred property ownership to a limited company, or a partner who is a lower rate tax payer.
              Previously, landlords only had to pay income tax on any rental profits after they’d paid the interest on their mortgage plus any expenses. The new rules change the amount of interest they can get tax relief on, reducing over 4 years.
              By transferring ownership of a property to a limited company or lower rate tax payer, small landlords are maximising the amount of interest that can be claimed against tax.
              These rules prevent landlords in higher tax brackets from claiming back all the tax on their mortgage repayments. Those who aren’t already in a higher tax bracket could be pushed into one as the tax changes could increase their income.
              New legislation making it harder to fund property investment

              New legislation from the Prudential Regulatory Authority (PRA) on lending criteria and the application process for landlords came into force in September 2017. It affects those with 4 or more mortgaged buy to let properties and requires lenders to carry out additional affordability checks. This means that lenders will take each landlord’s full property portfolio into account when considering a mortgage application.
              Worryingly, only 43% of small landlords are aware of these changes. Of those who are aware, the response is mixed. 44% believe it makes the process more difficult, while the same proportion believe it isn’t any more difficult. Almost a third think that the legislation makes it more likely that mortgage applications could be rejected.


                May I offer one word of caution to those investors who might engage with firms who offer a multitude of services including the sourcing of Property, carrying out refurbishment programs, property management and arranging for the finance and associated legal processes, all of which require sourcing fees etc.

                Lenders have for some time made it clear that they will not entertain applications from Property Investment clubs or under similar type firms but now they are stating that where a Property has been singularly sourced for which a fee is paid, any such application will be declined.

                When talking with various lenders at a seminar for specialist lending I inquired as to how they would know as the majority of such applications are placed by brokers engaged by such operations and in all probability might not make such a disclosure. The response was that where the broker operated some distance from the applicant and the client was purchasing property which is located at some distance from their primary address and finally where the solicitor operates again well away from the broker and clients , then it would be highly probable that the underwriters would seek to obtain satisfactory answers. There are of course legitimate reasons for such tripartite arrangements but the intentions are to gain transparency in the origins of purchase and the arrangements which might exist with the relevant professional entities.

                Clearly there is nothing illegal in entering such arrangements but lenders are becoming more diligent into how and why such applications originate.


                  TMW changes on Rental Stress Calculations

                  TMW have introduced changes to their rental stress calculations which has the possibility of affecting how much one might be able to borrow taking account of how many BtL are owned.
                  Buy to Let and Let to Buy HMO
                  Tax rate of 20% or less Tax rate of 40% or more
                  125% 145% 170%
                  Stress rate
                  Remortgage (without capital raising) 4.99% 5.50% 4.99%
                  All other application types 5.50% 5.99%
                  Exceptions apply:
                  • For remortgage applications without capital raising and fixed rate product terms of 5 or more years, the higher of stress rate or product pay rate (product pay rate + 0.50% for variable products) will apply.
                  • For all applications, the higher of stress rate or product pay rate + 2% (whichever is higher) will apply.
                  • For Further Advance applications where the existing product is ending within 3 months, the higher of follow on rate + 2% or 5.50% will be used to stress the existing loan.
                  • For existing customers switching products, no rental assessment will apply.

                  For remortgages, we'll apply the lower of the current rent or estimated rental value as given by the valuer.


                    Aldermore have kicked off the latest quarterly Libor Fixing from 0.55% to 0.65% and this is now reflected in all of their current new business products and mortgages which have completed and linked to this mechanism.

                    I will update on other lender increases as they occur.


                      It is becoming evident that for some lenders the level of Buy to Let mortgage business is falling below their business targets and one key element is the difficulties being experienced in meeting the tough rental stress calculations. Trying to stimulate more business some lenders are now introducing "Top Slicing" whereby an element of primary income may be included to assist in meeting the stress testing. All brokers active within this sector are being appraised of such lending policies by email but also by numerous Road Shows designed to help brokers navigate the occasional complex world of Buy to Let funding.


                        As a follow up to my earlier posting I am detailing an extract of a note relating to a lender within the One Savings Group which is focused on addressing the affordability issues particularly for non portfolio borrowers and those who are high income applicants with low yielding properties.

                        The lender has launched new affordability measures for buy-to-let which take a broader view of income, including landlords’ earnings from sources other than the property.

                        The lender, which is part of OneSavings Bank, will use earned income to supplement the interest coverage ratio (ICR) for buy-to-let loans, where the rental property yield in itself does not meet minimum requirements.

                        The changes are aimed at supporting non-portfolio landlords, whether they are borrowing through a limited company or as an individual.

                        High earners are likely to benefit, particularly where they have low-yielding property.”

                        I will try and keep Forum readers appraised of any subsequent lenders addressing this important element of mortgage applicant.


                          Thanks LA, seems like a sensible approach in circumstances where it is clear a borrower can more than easily cover their outgoings when their income as a whole is at least partly taken into account.


                            The latest twist in lending strategy involves the lender offering reduced Tracker/ discounted rates but increasing the amount of upfront fees in the “ genuine” belief that borrowers would prefer to use the completion fees as a genuine offset in costings knowing that by the time 20/21arrives the degree of what amount of interest can be offset would become marginal , what they fail to acknowledge is that their reversionary rates is in the upper 5% mark and in the absence of aswitch product would prompt serious consideration of having to refinance and all the possible costs that would involve. To my mind I suspect that they do not fully understand the rationale of Buy to Let investors and importantly know that such increased completion fees only boosttheir1st years profitability.


                              TMW RE-ENTERS LENDING TO LIMITED COMPANIES

                              Today TMW announced that it was reentering the niche of lending to Limited Companies with lending up to 80% of the PP or Val whichever is the lower. Rental Stress rates range from 125% for standard property & 170% for HMO's.

                              Interest Rates start with a 2 Year Fixed Rate of 2.99% , 3 Year Fix 3.24% and 5 Year Fix 3.49%. The 2and 5 Year product carry fixed Completion Fees of £1995 and the 3 Year product 2% of the loan.

                              Although PG's are required and a First Charge they have gone to great lengths to affirm that they will not be seeking a Floating Charge over the company's assets

                              Going forward they have also announced their intention at some point in the near future to consider Further Advances .

                              This is a valuable re-entry by TMW.


                                Misleading Marketing

                                Please allow me to get the following issue off of my chest.

                                I have noticed amongst my inbox emails , flyers from various sources purporting to have semi exclusive Buy to Let products from lenders of which they are one of a very small number (normally quoted as 5) who have access to these products. Please accept that in the vast majority of instances your own brokerage will be able to access these same products so please don't be fooled into believing that such brokerages have an advantage over your own established brokerage links.

                                The latest flyer relates to the availability of 85% funding via Kensington Mortgages only the second lender to make such high loan to value facilities available in the current market. I do not like in these uncertain times such high levels of gearing but for some this might be attractive. In common with the other provider the interest rates are a little chunky at 4.89% Fixed for 5 years. If this is what floats your boat talk with your broker , you might indeed surprise him with your advance knowledge !


                                Latest Activity