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  • loanarranger
    replied
    Lenders are expecting an increase in mortgage payment defaults during 2021

    High street banks are expecting more mortgage payment defaults at the start of this year, as demand is set to fall for home purchase lending.

    The end of mortgage payment holidays, as the economic impact of the pandemic hits households could be among the reasons lenders indicated in the Bank of England’s credit conditions survey that they anticipate an increase in default rates at the beginning of 2021.

    However, banks tipped the availability of mortgages to increase in the first three months of 2021, according to the poll carried out in the final quarter of last year.

    In the survey, banks said mortgages became more expensive at the end of last year but are set to fall in price at the start of this year.

    Borrowers with higher loan to value (LTV) ratios of more than 75 per cent are expected to benefit from a wider availability of mortgages.

    The end of the stamp duty holiday is widely expected to take some of the steam out of demand in the coming weeks, meaning lenders could potentially expect to compete harder for remaining borrowers.

    Demand for remortgaging is forecast as increasing at the start of

    Sarah Coles, personal finance analyst at Hargreaves Lansdown warned that the winter has sent a chill through the banks, as the impact of the pandemic starts to bite.

    “More people are set to fall short on mortgage and credit card payments, while an outbreak of cold feet in the property market is likely to mean less demand for mortgages for house purchases,” she said.

    “The heat is coming out of the housing market as the stamp duty holiday draws to a close, and much of the pent-up demand has worked its way through the system. But there are also signs that bleaker aspects of the pandemic are starting to make themselves felt.

    “Some homeowners have worked through the pandemic with their income unscathed, but enormous numbers saw their income cut as they lost work or went onto furlough. Some of them made a Herculean effort and somehow stayed on top of their bills.

    “Others have done all they can, and taken every available payment holiday, and are still struggling. At the beginning of this year, the high street banks expect them to start defaulting on mortgage payments.”

    John Goodall, chief executive of Landbay, agreed that demand was likely to ebb away.

    He added: “The key driver for the increase in demand for house purchase borrowing in Q4 2020 was the stamp duty holiday. It does not surprise me that demand is likely to fall in Q1 this year as buyers will no longer benefit from this tax break.

    “I agree with the data showing an expected rise in remortgage business during the start of this year. We are experiencing high levels of applications in the buy-to-let space and expect this to continue over the next few months.”

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  • loanarranger
    replied
    Nationwide are due to increase the maximum mortgage term to 40 years for lending at 90% LtV.
    With affordability under pressure for 1st time buyers the extension to 40 years will give positive assistance.

    Leave a comment:


  • loanarranger
    replied
    Is this the first of many lenders being honest so far as Stamp Duty 31st March is concerned.

    Hampshire Trust Bank is no longer accepting applications for mortgages required to complete before the end of the stamp duty holiday deadline on 31 March.

    Leave a comment:


  • loanarranger
    replied
    I have researched maximum percentage loan availability in the residential home mortgage market, my findings indicate that there are presently 25 lenders now prepared to consider such applications up to 90% subject to current income criteria assessment.
    It is important to note that where applicants have requested Credit Card/Secured/Unsecured payment holidays because of the current Covid19 this could have an impact on gaining acceptance , if this is thought to be a problem please make sure that if engaging a broker to assist, forthem to ensure that any enquiries made to lenders does not result in a Hard Footprint being made on the CreditInsight.

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  • loanarranger
    replied
    Saffron Building Society have today made the following announcement relating to ExPats

    Our Expat BTL is no longer available to applicants living in an EEA country.”

    I believe that this might be the tip of the iceberg so far as eligibility is concerned for ExPats living in the EEA and I will update should other lenders introduce similar restrictions.

    Leave a comment:


  • loanarranger
    replied
    Changes following Brexit

    Two lenders who are part of One Savings Bank have made an announcement concerning EU Nationals choosing to stay and work in the UK, It is reasonable to assume that all other lenders will have the same requirements in place even though they haven't broadcast such information openly to Intermediaries.

    EU Settlement Scheme
    Precise and Kent Reliance have issued an update following Brexit last week.

    For Applications submitted from 1st January 2021 where the applicant is an EU citizen they must provide a valid permanent residence document or evidence that settled or pre-settled status has been granted under the EU Settlement Scheme. This can be in the form of a letter from the Home Office confirming their settlement status or a Residence Card. Settled status is awarded to EU citizens that can evidence a minimum of 5 years’ continuous residence in the UK, whereas pre-settled status applies to those who have not resided in the UK for 5 years.

    Those awarded pre-settled statuses can apply for settled status once the 5-year residence requirement can be met.

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  • loanarranger
    replied
    Santander make a significant change to its criteria sofar as Self Employed applicants are concerned for residential mortgage applications, see below

    "Santander is limiting all new residential mortgage applications where any applicant is self-employed to 60% LTV to help manage its current pipeline cases.

    All full mortgage applications submitted from 6am on Saturday 9th January will be assessed using the new self-employed lending policy.

    Reiterating its self-employed evidence requirements, Santander said that it is unable to use income towards affordability if a client's business is not currently trading due to Covid-19 tier restrictions.

    Where borrowers use personal bank statements for their business, Santander requires business related credits highlighted to be able to assess current trading levels.

    Where SA302s are used to prove income, Santander requires the business turnover provided to help cross reference with the bank statements.

    In addition to providing supporting rationale that the business bank statement supports the income declared, Santander is also asking brokers to provide supporting rationale that the income is sustainable going forward."

    Leave a comment:


  • loanarranger
    replied
    A few lenders have reduced their rates on both Buy to Let as well as for residential , lenders like Paragon are waiting to see what their kety competitors are going to do before making any changes but from comments made by Sales Managers for several lenders , the volume of applications has slowed down with the majority of business being remortgages.
    I will keep the forum updated with any key changes including criteria that arise.

    Leave a comment:


  • loanarranger
    replied
    Is this going to become a general practice of all lenders

    An announcement from Halifax to all Mortgage Intermediaries today.


    Halifax has tightened its affordability criteria for borrowers with any self-employed income or those earning less than £30,000 a year.


    In a note to its intermediaries, Halifax said the 4.49 times income multiple currently used for workers earning less than £25,000 will be extended to include those with annual earnings of less than £30,000.

    The bank said it was making the change to ensure it continued to lend responsibly to borrowers on lower salaries.

    Applications that include any element of self-employed income will also be subject to the same change.

    Halifax said this temporary change would give it “short-term flexibility on products and service levels”. The criteria change will kept under regular review.

    To capture the information, the affordability calculator on the Halifax Intermediaries’ website will include the question, “does any applicant have any self-employed income?”

    All other loan to income ratios will remain the same.

    A spokesperson for Halifax said the bank regularly reviews criteria and the change remains in line with the market.

    The changes take effect from Thursday 7 January

    Leave a comment:


  • loanarranger
    replied
    There is a glimmer of hope in the Residential Homeowner sector

    4 lenders have announced their return to lending up to 90% Loan to value:-
    HSBC
    Barclays Bank
    Coventry
    Cambridge.

    Given the absence of three of these larger lenders in recent months it might suggest that some lenders are feeling a little more positive going into 2021.

    Leave a comment:


  • loanarranger
    replied
    As it is the last day of 2020 I thought, subject to the moderators consent, to provide details of products available to borrowers on standard property and where they are classified as Non Portfolio. I offer no endorsement for any lender just a mere guide to the various options that might be available.

    I have focused on 5 year deals but if shorter dated incentives are required I am happy to oblige.

    Init Rate Inc Period Init Rept Rev Repat Total Cost
    Property £200000 with rental of £850 per month borrowing 80% on a Non Portfolio basis
    Accord 3.99% Fixed 63 Months £538.63 £606.13 £32,523.69
    Landbay 3.99% Fixed 60 Months £544.29 £695.70 £32,757.40
    Foundation Home Loans 4.59% Fixed 61 Months £624.24 £692.24 £38,423.64
    Property £200000 with rental of £850 per month borrowing 75% on a Non Portfolio basis
    Accord 2.03% Fixed 63 Months £257.12 £568.71 £16,038.56
    Virgin Money 2.09% Fixed 64 Months £264.72 £575.05 £16,472.08
    The Mortgage Works 2.09% Fixed 63 Months £266.48 £668.10 £16,898.24
    Post Office 2.12% Fixed 63 Months £267.64 £579.47 £17,071.32
    The Mortgage Works 2.14% Fixed 63 Months £271.06 £663.71 £17,186.78
    Accord 2.19% Fixed 63 Months £275.57 £564.97 £17,200.91
    The Mortgage Works 2.19% Fixed 63 Months £277.39 £663.71 £17,335.57
    Skipton BS 2.21% Fixed 64 Months £279.92 £613.05 £18,015.88
    Virgin Money 2.24% Fixed 64 Months £281.86 £571.26 £17,569.04
    Skipton BS 2.29% Fixed 64 Months £288.15 £609.01 £18,542.60
    Godiva Mortgages 2.29% Fixed 67 Months £290.06 £568.73 £19,567.02
    The Mortgage Works 2.39% Fixed 63 Months £300.73 £659.34 £18,805.99
    Godiva Mortgages 2.45% Fixed 67 Months £308.29 £564.99 £20,788.43
    Property £200000 with rental of £850 per month borrowing 70% on a Non Portfolio basis
    Platform 1.99% Fixed 64 Months £235.48 £650.83 £14,620.72
    Platform 2.04% Fixed 64 Months £239.70 £646.25 £15,140.80
    Accord 2.03% Fixed 63 Months £240.21 £531.30 £14,973.23
    Virgin Money 2.09% Fixed 64 Months £247.31 £537.21 £15,357.84
    The Mortgage Works 2.09% Fixed 63 Months £248.71 £623.56 £15,778.73
    Skipton BS 2.11% Fixed 64 Months £249.67 £572.71 £16,079.88
    Post Office 2.12% Fixed 63 Months £249.97 £541.22 £15,958.11
    NatWest 2.14% Fixed 63 Months £251.44 £480.56 £15,870.72
    Nottingham BS 2.13% Fixed 62 Months £251.52 £772.27 £16,058.24
    Skipton BS 2.15% Fixed 64 Months £252.62 £568.68 £16,268.68
    The Mortgage Works 2.14% Fixed 63 Months £253.22 £620.04 £16,062.86
    NatWest 2.18% Fixed 63 Months £256.14 £480.56 £16,166.82
    Accord 2.19% Fixed 63 Months £257.32 £527.56 £16,051.16
    Godiva Mortgages 2.19% Fixed 67 Months £257.32 £527.57 £17,373.44
    The Mortgage Works 2.19% Fixed 63 Months £259.14 £620.04 £16,185.82
    Bank Of Ireland 2.22% Fixed 62 Months £260.84 £480.56 £16,382.08
    Platform 2.24% Fixed 64 Months £261.33 £583.33 £16,775.12
    Skipton BS 2.21% Fixed 64 Months £261.51 £572.71 £16,837.64
    Virgin Money 2.24% Fixed 64 Months £263.19 £533.43 £16,374.16
    Nottingham BS 2.30% Fixed 62 Months £268.33 £763.00 £17,100.46
    Skipton BS 2.29% Fixed 64 Months £269.07 £568.68 £17,321.48
    Godiva Mortgages 2.29% Fixed 67 Months £270.98 £531.31 £18,288.66
    Leeds BS 2.39% Fixed 63 Months £278.83 £652.17 £17,800.29
    The Mortgage Works 2.39% Fixed 63 Months £280.82 £615.68 £17,551.66
    Leeds BS 2.44% Fixed 63 Months £284.67 £652.17 £18,133.21
    Skipton BS 2.44% Fixed 64 Months £284.67 £564.67 £18,319.88
    Metro Bank 2.44% Fixed 60 Months £287.71 £483.45 £17,347.60
    Godiva Mortgages 2.45% Fixed 67 Months £287.87 £527.57 £19,420.29
    Property £200000 with rental of £850 per month borrowing 65% on a Non Portfolio basis
    The Mortgage Works 1.64% Fixed 63 Months £181.22 £523.77 £11,526.86
    The Mortgage Works 1.79% Fixed 63 Months £196.89 £521.38 £12,514.07
    Leek United BS 1.87% Fixed 63 Months £204.76 £568.28 £12,704.88
    Godiva Mortgages 1.89% Fixed 67 Months £207.90 £493.90 £14,062.30
    Leek United BS 1.96% Fixed 63 Months £213.80 £566.12 £13,274.40
    The Mortgage Works 1.99% Fixed 63 Months £218.89 £521.38 £13,650.07
    Platform 1.99% Fixed 64 Months £218.90 £550.00 £13,559.60
    Accord 2.00% Fixed 63 Months £219.16 £492.01 £13,397.08
    Platform 2.04% Fixed 64 Months £221.00 £541.67 £14,194.00
    The Mortgage Works 2.04% Fixed 63 Months £222.69 £517.43 £13,889.47
    Accord 2.03% Fixed 63 Months £223.29 £493.88 £13,907.27
    Godiva Mortgages 2.05% Fixed 67 Months £223.79 £490.15 £15,126.93
    Virgin Money 2.09% Fixed 64 Months £229.89 £499.38 £14,242.96
    Accord 2.11% Fixed 63 Months £230.33 £490.14 £14,100.79
    The Mortgage Works 2.09% Fixed 63 Months £230.95 £579.02 £14,659.85
    Skipton BS 2.11% Fixed 64 Months £232.09 £532.38 £14,954.76
    Leeds BS 2.13% Fixed 63 Months £232.17 £609.31 £14,825.71
    Post Office 2.12% Fixed 63 Months £232.31 £502.97 £14,845.53
    Leek United BS 2.13% Fixed 63 Months £233.23 £568.28 £14,498.49
    NatWest 2.14% Fixed 63 Months £233.61 £446.47 £14,747.43
    Leeds BS 2.14% Fixed 63 Months £233.61 £610.24 £14,951.43
    Nottingham BS 2.13% Fixed 62 Months £233.77 £717.77 £14,957.74
    Skipton BS 2.15% Fixed 64 Months £234.70 £528.35 £15,121.80
    The Mortgage Works 2.14% Fixed 63 Months £235.39 £576.38 £14,939.57
    Godiva Mortgages 2.15% Fixed 67 Months £236.50 £493.90 £15,978.50

    Leave a comment:


  • loanarranger
    replied
    JPKeats your observations are correct and I believe that this arrangement may have a subtext regarding possible breaches of the occupancy HMO license which if done would indeed elicit a higher level of rent.

    I was amazed during my research to read the pronouncements of some of these Property Educators and the lure that they offer to seduce gullible persons to participate in their wonder Master Classes or any other adjective to incentivise their claims , what does seem missing is the mention of having such arrangements meeting the specific criteria of lenders , I just wonder why??? !!

    Leave a comment:


  • jpkeates
    replied
    I suppose I should have added 'legally' - "company B who will legally rent to the public"...

    Leave a comment:


  • jpkeates
    replied
    Thanks, Mr Arranger, informative!

    I do worry that people can really believe that being a landlord letting to company A who will let to company B who will rent to the public could possibly mean that the landlord could earn "more" than letting individual rooms directly to the same public.

    Leave a comment:


  • loanarranger
    replied
    Buy to Let Mortgage for Rent to Rent

    I thought I would share the following given the level of hype that seems to be promulgated by various Property Educators judging from research on the web.

    In early December I received a call from someone who had been recommended by another client. The gist of his enquiry was to raise a mortgage to buy an HMO as a first investment through a new SPV.

    He proceeded to tell me that he intended to let the property to a Limited Company who would take responsibility of creating a separate agreement with another organisation to let the property to a variety of persons seeking accommodation.This concept seems to have come about after having completed an “Online Master Class “ and paying a significant sum to learn about buying and letting HMO’s.
    On discussing the proposition further, it transpired that no AST would be created but an agreement to let to the company who in turn would contract out to another Limited Company for three/ five years but the rental was “ guaranteed” to be higher than if the property was let on a Room by room basis!!

    At this point I pointed out that such an arrangement would fall outside the criteria of all lenders who operate in the HMO/ Limited Company sector to which he challenged my understanding given that he had been assured that it was perfectly legal to operate such a scheme. I then promised to investigate and respond, this took me several days to complete.

    During my research I searched the internet and was intrigued at the number of searches which revealed the “ Rent to Rent” arrangement and the ease under which such arrangements can be put in place but also whether it was indeed a legal facility to undertake. With this information I spoke with all lenders and my concerns were confirmed certainly when it comes to obtaining a Buy to Let Mortgage was concerned.

    Clearly if the property is unencumbered there is absolutely nothing to prevent the owner from entering into any such type of letting , the only condition was to ensure that the Insurance Company was fully appraised of the Letting arrangements and the type of persons who would occupy the property, failure to do so could render the policy as void if such material information had not been disclosed.

    The same however cannot be said when the property is subject to a mortgage , lenders insist on a minimum AST of six months for a new Tenancy and, depending on which lender , a normal maximum of 2/3 years; the only exceptions to this is where the Landlord enters into a 3/5 year Agreement with a Housing Society or Local Authority on a full repairing basis or to a Limited Company for a similar period but where the occupants are employees of the company. There are no other exceptions.

    Clearly the information disappointed my “ New Client” as he had genuinely believed that this was a money winner given the saving on Management fees and no additional demands on him other than accounting for the profits.

    Some of the lenders with whom I spoke with were very aware of such arrangements and which seem to arise below the radar after the borrower has let the property in strict accord with the mortgage terms but after say 6 months have elapsed they move into a Rent to Rent arrangement in the belief that the lender won’t find out, equally the property now has the wrong type of Buildings Insurance in place and leaves the tenants unaware that the building will not be covered if a claim were to be made.
    Lenders now have special teams who monitor such lending and where it is discovered that breaches of the mortgage have occurred they reserve the right to ask for the loan to be repaid and potentially place the borrower onto the Hunter System

    Apologies for the lengthy post but once again such schemes cause me frustration at the promulgation of a scheme which based on lenders criteria is adjudged as being way outside of criteria. There may indeed be niche lenders who will fund on an entirely different basis to the conventional lenders but I know of none.

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