The next raft of PRA (Prudential Regulation Authority) or Painfully Robust Administration changes are almost upon us as Chris Longhurst, consultant mortgage broker, explains.
In a flash October will be here and the specialist approach to underwriting that lenders must adopt on buy to let mortgage applications from portfolio landlords will be live.
After a slow start a good number of lenders have now offered at least an initial position on their stance going forward. To summarise, the more commercially minded lenders are essentially saying 'no change' as they have always underwritten cases in this way. Those more vanilla lenders, generally with the keenest pricing, are separating the two parts; those with three or fewer mortgaged properties should find the process more streamlined whilst those with four or more can expect the same information overload as the other lenders.
If there is one message to offer at this stage it is that every application form will need to be both accurate and fully completed. Early indications are that the information provided will be thoroughly analysed:
• Portfolio schedules will be reviewed, probably with the help of automated valuation systems
• All outstanding mortgages will need to be found on credit searches or annual lender statements provided
• Rentals and monthly payments will be checked against bank statements
• Evidence of rental income - and all other sources of income for that matter - will need to be reflected on tax returns
Phew! Oh no wait...
• Business plans and cash flow forecasts will have to be produced.
These aren't necessarily difficult to do but they will take additional preparation time - and that's another blog!!
The more accurate we can make the initial approach to the lender the better the likely outcome but do be prepared for delays whilst all this additional information is being processed. I suspect the services of a knowledgeable broker will never be more welcome and we are fortunate enough to have a few here!
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