Gary McKenna, consultant mortgage broker explains why portfolio landlords should review their mortgage arrangements before the summer is up!
1. Portfolio landlords will soon be subject to stricter affordability checks
From 30th September 2017 portfolio landlords (landlords with four or more mortgage investment properties) will undergo stricter affordability checks, as lenders apply the new guidelines set out by the Prudential Regulation Authority.
This means ‘portfolio landlords’ will be required to provide much more paperwork as part of their application! This is likely to include an up-to-date property portfolio spreadsheet, a business plan, cash flow forecasts, SA302s, ASTs, submitted tax returns, last three months’ bank statements and income and expenditure statements!
2. Expected slowdown in turnaround times come September
Related to the point mentioned above, come 30th of September we expect to see a slowdown in the turnaround times as lenders adjust to their new procedures.
It is common knowledge within the industry that the majority of lenders are yet to work out how they are going to amend their policies and processes, so a smooth transition isn’t looking likely. I wouldn’t be surprised if we even seen some lenders put a temporary hold on lending to portfolio landlords.
3. Take advantage of the competitive rates on offer
No one knows exactly when Bank Rate (and therefore mortgage rates) will rise, but as we speak mortgage rates are sitting at an all-time low, so why not take advantage of the deals on offer?
For example we currently have a 3.29%* (4.6% APR) 5 year fixed rate on the market available to both individuals and SPV Ltd Co’s.
- Unlimited number of buy to let mortgages with other lenders
- No maximum age at the end of the loan term
- No minimum income requirement
- Ex-pats accepted as part of an SPV Ltd Co application
Of course, as well as all of the points mentioned above reviewing your property portfolio could save you money and help you unlock any untapped equity! Don’t just assume you’re stuck on your current rates, or that they are the best available for your situation.
Here are Mortgages for Business we offer a FREE OF CHARGE and WITHOUT OBLIGATION review service. Simply download and complete the Property Portfolio Review spreadsheet and return it to me email@example.com or your dedicated mortgage consultant.
All you need to do is send us your form! We will do the rest, so what do you have to lose?
We can also accept review forms via post, or give us a call on 0345 345 6788 to discuss.
*Fixed at 3.29% 5 years (to 31/10/2022) reverting to 4.79% (Lender’s Interbank Offered Rate + 4.5%). For purchases and remortgages. Early Repayment Charges: 5% of the amount being repaid for the first year, then 4% until the end of year 2, then 3% until the end of year 3, then 2% until the end of year 4, then 1% until the end if year 5. Overall Cost for Comparison: 4.6% APR. Loan to Value: 65% loan to value up to £500,000 loan amount. Lender Arrangement Fee: 2% added to loan (£500 limited company processing fee payable on completion). Broker Fee: Our standard broker fee is due on receipt of an Agreement in Principle from the lender, charged at £497 for personal applications and £597 for applications made by limited companies (other fee options available). Repayment Options: Interest only or repayment. Rent to Interest Cover: Individuals - Higher of 145% of payrate or 5.5% notional rate. Limited Company - Higher of 125% of payrate or 5.5% notional rate. 5 year rates are stressed at payrate. Minimum Income Requirement: No requirement.