Jeni Browne, Head of Residential and Buy to Let Lending blogs on why Axis Bank have gone from zero to hero in just five working days.
Axis launched a week ago and so far we have submitted 20 Agreements in Principle (AIP). This means that in the last week, Axis is the lender we have approached on behalf of our clients the most. So the question is why? What are they doing that has taken them from zero to hero in just five business days? I decided to speak to our brokers and find out why they have been using Axis Bank.
Three of our AIPs were for HMOs. We chose Axis because their 75% LTV rate (4.59% 5 year fixed with a 2% fee) is the best on the market. They can also do small blocks of flats on these terms. One word of caution, Axis will value all HMOs on a bricks and mortar basis, rather than an investment value.
Twelve of the AIPs were for landlords with portfolios whose main income is from property. Sure, other lenders could do this but here are some more peculiarities of these cases:
•Exposure limits. Whilst Axis restrict their own exposure on borrowing to five properties, landlords can have an unlimited number of mortgaged properties with other lenders. This is great for landlords with larger portfolios.
• No credit scoring. Sure, Axis credit search to thoroughly check a potential borrower’s background but they don’t use the scoring system. They look for a clean profile but can consider minor discretions. This is great for many landlords who don’t pass credit scoring because they have lots of highly utilised credit lines, or have had a lot of credit searches.
• No minimum income requirement. Of course things have to feel realistic – if you earn £5k pa but have a residential mortgage of £500k and credit cards of £20k, the numbers just don’t work on any level. But, and this is the key, Axis understand landlords’ accounts and are able to read them for what they are and then make a sensible, commercial decision.
• Rental calculation. On a vanilla property in personal names Axis can get to 235 x monthly rent on their five year fixed rate. This gives them one of the most generous rental calculations in the market and works tremendously well on those lower yielding, high value properties.
The last five AIPs have been for applications in a limited company name and like the HMO deals, the pricing is extremely good. They don’t ask for debentures, don’t mind there being other lenders in the background and can combine the Ltd Co entity with the property being an HMO or small block of flats.
In terms of application processing, we’ve been working closely with Axis and are pleased that their systems have been designed to handle both vanilla and complex propositions including limited companies and HMOs. We will continue to work closely with Axis over the remainder of the pilot to ensure smooth case processing ahead of launch to the wider market.
So, whilst Axis are shaping up nicely, it would be remiss to omit to mention their geographical restrictions which mean that they lend in the South East only.
The good news for landlords looking to finance properties throughout England and Wales, is that we have Landbay. For those who aren’t familiar with their offering, it’s really very good. It will accept:
• HMOs up to a maximum of 10 beds and importantly, it will give investment values rather than bricks and mortar values for those properties with a statutory licence
• Multi-unit freeholds blocks of up to 4 flats
• Limited company borrowers (same rules as for Axis, see above)
• Professional landlords with larger portfolios
Landbay also has great rates – its pricing is more attractive on the trackers than the fixes - and recently extended its mortgage term from five to 10 years which has proved popular with borrowers. It also has a proven track record in getting cases to completion. From experience, we know that they have a real appetite to lend and are able to take a commercial view on applications where other lenders cannot.
In case you don’t know, Landbay is peer-to-peer platform (also known as a crowdfunder) which specialises solely in buy to let. As asset administrators between lender and borrower, they don’t have to operate under the capital adequacy rules as the traditional buy to let lenders so can be more a more flexible solution.
So, two good options to consider. Of course there are other great lending solutions out there for landlords with larger portfolios so if you are looking for finance, do get in touch to talk through which scenarios might work for you.
As ever, we look forward to helping, so call us today on 0845 345 6788.