BTL – Apply before the rules change
Apply before the rules change
New PRA rules regarding affordability on BTL loans are set to come in at the start of 2017.
This will simply make it more difficult to place BTL cases and some lenders are already tightening the screws in readiness.
The BTL second charge sector enjoys great flexibility at the moment as an alternative to a remortgage or to raise deposits.
I strongly recommend you prompt your BTL clients to get any applications in now, rather than wait until the New Year.
Below are some recent examples of complex BTL second charge cases we have dealt with.
- Client was living and working in Australia with a BTL property in this country but with little credit history in the UK.
Mortgage is interest only and looking to raise further interest only funds to purchase another property in Australia. The broker couldn’t arrange another interest only mortgage.
Promise completed an interest only second charge relying solely on the rental income for affordability. - Previous tenants left the BTL property in an uninhabitable condition and ripped out the kitchen and bathroom so no remortgage available. Funds were required to carry out the work and re-let but the landlord was relatively inexperienced with limited additional provable income and a chequered credit history.
Promise completed a short term second charge bridging loan to complete the works with a second charge exit after a couple of months working off the proposed rental income. - Client looking to increase his BTL portfolio but had no deposit so needed to take some equity out of the BTL properties. However he was tied in to the existing mortgages with high ERC’s.
Promise raised the deposit by second charges on multiple BTL properties which allowed the introducing broker to arrange the BTL mortgages. - Client wanted to raise money for consolidation purposes secured against a BTL but the rental income didn’t cover the mortgage payment and there was some adverse credit in the background.
Promise raised the full amount required by choosing a second charge lender which assessed affordability taking into account both the rental and earned income.
With BTL rates starting at 5.49% our second charge lenders provide great flexibility around property type, construction as well as the client profile re age, income types etc.
If you are struggling to place complex BTL cases call Promise ASAP. As we approach the New Year we expect it to get more difficult.
01902 585052
Promise Money is a broker not a lender. Therefore we offer lenders representing the whole of market for mortgages, secured loans, bridging finance, commercial mortgages and development finance. These loans are secured on property and subject to the borrowers status.
More than 50% of borrowers receive offers better than our representative examples
The %APR rate you will be offered is dependent on your personal circumstances.
Mortgages and Remortgages
Representative example
Borrow £270,000 over 300 months at 7.1% APRC representative at a fixed rate of 4.79% for 60 months at £1,539.39 per month and thereafter 240 instalments of £2050.55 at 8.49% or the lender’s current variable rate at the time. The total charge for credit is £317,807.66 which includes £2,500 advice / processing fees and £125 application fee. Total repayable £587,807.66
Secured / Second Charge Loans
Representative example
Borrow £62,000 over 180 months at 9.9% APRC representative at a fixed rate of 7.85% for 60 months at £622.09 per month and thereafter 120 instalments of £667.54 at 9.49% or the lender’s current variable rate at the time. The total charge for credit is £55,730.20 which includes £2,660 advice / processing fees and £125 application fee. Total repayable £117,730.20
Unsecured Loans
Representative example
Annual Interest Rate (fixed) is 49.7% p.a. with a Representative 49.7% APR, based on borrowing £5,000 and repaying this over 36 monthly repayments. Monthly repayment is £243.57 with a total amount repayable of £8,768.52 which includes the total interest repayable of £3,768.52.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME
REPAYING YOUR DEBTS OVER A LONGER PERIOD CAN REDUCE YOUR PAYMENTS BUT COULD INCREASE THE TOTAL INTEREST YOU PAY. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Promise Money is a trading style of Promise Solutions Ltd – Company number 04822774Promise Solutions, Fullard House, Neachells Lane, Wolverhampton, WV11 3QG
Authorised and regulated by the Financial Conduct Authority – Number 681423The Financial Conduct Authority does not regulate some forms of commercial / buy-to-let mortgages
Website www.promisemoney.co.uk