It’s been a busy quarter for the buy to let space with new lenders being welcomed into the fray.
As you know we are always keen to have a thorough understanding of lending criteria to help quickly us identify where cases should be placed.
State Bank of India has started with some extremely attractive pricing. Its terms and arrangement fees are pretty good too. The headline features as I see them are:
• 5 year fixed rates starting from 3.69%
• 3 year variable rates starting from 2.89%
• Arrangement fees from NIL to £795 to 1%
• General stress test at 120% of pay rate plus 1%
• Maximum loan up to £3,000,000
• Available to SPVs & LLPs
• Multi-units up to 3 flats
• Maximum age of 80 years at end of mortgage term
As the biggest bank in the world (by number of branches) customers can access the products directly and it does have a sales presence in its branches but these are limited to a few pockets in London, Birmingham, Leicester and Manchester.
However, SBI has also entered the intermediary space. Currently it has a small panel of brokers including Mortgages for Business but its BDMs are also out and about talking to other brokers and some of the networks.
I’m sure that volume will dictate how quickly the panel grows and with such competitive pricing I’m guessing that may be quite fast.
We recently joined the limited distribution panel of Foundation Home Loans which launched its buy to let offering to 75% LTV in February with products for both prime borrowers and those with light adverse credit. The best bits are:
• 2 year fixed rate at 3.99%
• 2 year discounted tracker at 3.76% (LIBOR+3.19%)
• No maximum number of mortgaged properties in the background
• Can have up to 10 properties (max £5m) with FHL
• Max 3 properties in any one full postcode
• Max age 85 at end of mortgage term
• No credit scoring
• No minimum income
• No minimum time self employed
• They are ‘good’ with related sales and gifted deposits
• No minimum size for studios
• No background affordability checks
To fit prime products, there must be no adverse in the last 2 years (missed mortgage payments, defaults or CCJs - unsecured borrow is ignored). With the light adverse range borrowers can have 1xCCJ or default (max £2k) or 1xmissed mortgage payment in the last two years (but clean in the last six months).
FHL is not suitable for limited company or ex pat borrowers and in terms of property it’s a no go for flats less than two years old, HMOs, let to buy, flats above commercial, flats above six storeys.
On the brink of entering the fray (expected in early Q2 2015) is Axis Bank which will be positioning itself firmly in the specialist space.
Unlike SBI, products will be available via intermediaries only and we’ve been working closely with them over recent weeks, helping to test systems and iron out any blips before launch. I must say that I am very impressed with their thoroughness.
Whilst I can’t yet say anything about rates, I can tell you that we expect the following great terms:
• No minimum income requirements
• Unlimited number of mortgaged properties with other lenders
• Maximum loan size of £1,000,000
• Lending to limited companies and ex-pat landlords
• HMOs will be acceptable security
Of course, for SBI and FHL it’s very early days I can’t yet give you any feedback on service and turnaround times but we have already submitted a few DIPs and cases so will let you know how we get on at a later date.
To close, it only seems fair to dedicate our best buys to the new kids on the block, plus relatively new player and P2P lender Landbay.