As the stamp duty deadline has now passed, we are starting to see a few changes in the market, including the reintroduction of some of the higher loan to value 80% options. This is positive for investors who have a reduced deposit. We are also seeing a reduction in interest rates for the specialist limited company BTL lending, which is also encouraging.
Kent Reliance
Kent Reliance are one of the latest lenders to launch an 80% option, and they have now a range of products for all types of lending. The rates are now all the same for HMOs, limited company borrowing, and multi-unit blocks.
80% loan to value/purchase price
2-year fixed – 3.99%
– 1.5% arrangement/product fee added to the loan
5-year fixed – 4.29%
– 1.5% arrangement/product fee added to the loan
They also have a full range of 75% products.
Key criteria:
• Available for HMOs/multi-unit blocks and all limited company borrowing
• £50,000 minimum loan size, but where loan to value exceeds 75% the minimum loan is £100,000
• No minimum personal income
• HMOs accepted for first-time landlords up to 6 bedrooms
• Complex limited company structures considered
The Mortgage Works
Another positive move for the specialist BTL market has been the launch of 80% limited company BTL products from The Mortgage Works. This is excellent for the market and will continue to increase competition between the lenders. These products are only available for single BTL properties, and they must have an EPC rating of A, B or C at application otherwise lending is limited to 75%.
80% loan to value/purchase price
2-year fixed – 2.79%
– 2% arrangement/product fee added to the loan
5-year fixed – 3.49%
– 2% arrangement/product fee added to the loan
Key criteria:
• £50,000 minimum value/purchase price
• No minimum personal income
• EPC rating of A, B or C
• Simple company structures only – maximum of two directors and shareholders
Personal borrowing only
They do also consider portfolio landlords but with separate requirements.
Current products include 75% loan to value/purchase price:
1.99% 2-year fixed
– £995 arrangement fee
2.37% 2-year fixed
– No arrangement fee
2.12% 5-year fixed
– £995 arrangement fee
2.42% 5-year fixed
– No arrangement fee
These are all good options if you are looking to maximising the rent you achieve by renting to sharers, but still, want access to mainstream BTL rates.
If you are looking at multiple tenancy agreements or larger HMOs, another option would be to consider one of the specialist lenders as I covered in the June edition.
If you would like to discuss any funding and options for multi-lets please give me a call or send me an email and I will be happy to discuss.
Fleet Mortgages
Another lender to return to 80% borrowing for personal borrowing and limited company lending is Fleet Mortgages.
80% loan to value/purchase price
2-year fixed – 3.89%
– 2% arrangement/product fee added to the loan
5-year fixed – 4.19%
– 2% arrangement/product fee added to the loan
Key criteria: for 80% borrowing
• Available for personal borrowing or limited company on standard BTLs only
• £100,000 minimum value
• £15,000 minimum personal income
• Principle applicant must be a property owner for a minimum of six months
We also have 80% options from specialist lenders such as Foundation Home Loans and Paragon, so this is a good step for the market.
Multi-lets/student lets/small HMOs
As investors continue to look to maximise their rent achieved, the number of enquiries for HMOs and multi-lets have increased considerably.
There are many investors purchasing HMOs and converting properties into licensed HMOs, but I do have quite a few clients who, whilst they would like to maximise their rent achieved, do not want the responsibility of a licensed HMO.
Many of the standard high street BTL lenders will allow sharers, as long as they are all on one tenancy agreement for the whole house and not individual agreements.
BM Solutions – Will allow up to five sharers on one tenancy agreement for the property
The Mortgage Works – Will allow four sharers on one tenancy agreement
Virgin Money – As with Mortgage Works, they will allow four sharers on one agreement
Coventry/Godiva – Maximum of four tenants on one agreement
These are just a few of the lender examples, but it shows that you are able to maximise your rent achieved by having individuals sharing the property on one agreement without the need for specialist HMO finance.
Other mainstream lenders will consider sharers, such as Skipton Building Society, who have a range of competitive BTL products and will allow for up to four sharers, either on individual agreements or one agreement for the house. This gives you an opportunity to have multiple tenants on their own agreements to maximise rent, but still have access to standard high street BTL finance
Key criteria:
• £50,000 minimum valuation/ purchase price
• £20,000 minimum personal income
• Lending up to 75% loan to value
• First-time landlords accepted, as long as you have owned your own residential property with a mortgage history for a minimum of six months
Limited Company Mortgage Overview
The lending options for limited company borrowing are improving all the time. Lenders are launching limited edition lower rates and starting to provide incentives such as free valuations, free legal remortgage services and cashbacks, which is helping the investor with the costs of finance. We are also starting to see a reduction in the interest rates, so this can only be positive for the market.
If you are looking at a limited company purchase or refinance, key to your options available will be the structure of your company. Each lender has their own individual criteria on the directors’/shareholders’ personal circumstances and company structures, so you will need to discuss with your broker.
Single let options include:
As always, I am available should you require any advice on a BTL mortgage, residential mortgage, commercial finance, bridging finance, or development finance. I work with investors all over the country with property investment opportunities from their very first BTL property to experienced landlords to large development finances and bridge loans, so please give me a call or send me an email.
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