Return of 80% LTV Buy To Let Mortgages
Finally, some good news for investors! Straightforward common sense lending returns with competitive rates for higher borrowing.
Since our last article we have been inundated with new applications from investors on the traditional 75% products. We are certainly seeing the return of the investor appetite this Spring from the level of mortgages we are processing which has risen dramatically. We have calculated that our applications are up 63% for buy to let mortgages. We believe this is due to increased investor confidence in a growing property market.
It's set to get even more busy and that confidence seems to be contagious; as The Mortgage Works introduce the return to 80% LTV Buy To Let mortgages with a selection of rates that are surprisingly low. Traditionally when a lender decides to set a new benchmark they tend to milk borrowers for as much as they can. With rates starting from a 1 year fixed at 4.69% with a 2.50% arrangement fee, they have dealt an interesting hand to the current market leader Birmingham Midshires who only offer 75% LTV with their nearest fixed rate for 1 year at 5.05% with a 2.50% arrangement fee.
Complete 80% Range
(Correct as of 15th May 2010 - Please contact us for updated rates and criteria)Â
| 1 Year Fixed |
| Â |
| 4.69% until 31.07.2011, thereafter 4.99% (variable) 5.4% APR |
| ·                 Rental calculation based on 4.99% |
| ·                 Available to first time landlords up to 65% for Purchase only |
| ·                 Reverts to The Mortgage Works Managed Rate - currently 4.99% (variable) |
| ·                 Available for Purchase, Remortgage and Further Advance |
| Early Repayment Charge: 5% of capital repaid until 31.07.2011 Max LTV: 80% Arrangement Fee: 2.50% of loan (minimum £595) |
| Â |
| Â |
| 5.69% until 31.07.2011, thereafter 4.99% (variable) 5.4% APR |
| ·                 Rental calculation based on pay rate |
| ·                 Available to first time landlords up to 65% for Purchase only |
| ·                 Reverts to The Mortgage Works Managed Rate - currently 4.99% (variable) |
| ·                 Available for Purchase, Remortgage and Further Advance |
| Early Repayment Charge: 5% of capital repaid until 31.07.2011 Max LTV: 80% Arrangement Fee: 1.50% of loan (minimum £595) |
| Â |
| Â |
| 5.99% until 31.07.2011, thereafter 4.99% (variable) 5.4% APR |
| ·                 Rental calculation based on pay rate |
| ·                 Available to first time landlords up to 65% for Purchase only |
| ·                 Reverts to The Mortgage Works Managed Rate - currently 4.99% (variable) |
| ·                 Available for Purchase, Remortgage and Further Advance |
| Early Repayment Charge: 5% of capital repaid until 31.07.2011 Max LTV: 80% Arrangement Fee: £1795 (maximum loan £250,000) |
| Â |
| 1 Year Tracker |
| Â |
| 4.69% until 31.07.2011, thereafter 4.99% (variable) 5.4% APR |
| ·                 BBR + 4.19% until 31.07.2011 |
| ·                 Rental calculation based on pay rate + 0.5% |
| ·                 Available to first time landlords up to 65% LTV for Purchase only |
| ·                 Reverts to The Mortgage Works Managed Rate - currently 4.99% (variable) |
| ·                 Available for Purchase, Remortgage and Further Advance |
| Early Repayment Charge: 3% of capital repaid until 31.07.2011 Max LTV: 80% Arrangement Fee: 2.50% of loan (minimum £595) |
| Â |
| 18 Month Fixed |
| Â |
| 5.49% until 31.01.2012, thereafter 4.99% (variable) 5.5% APR |
| ·                 Rental calculation based on pay rate |
| ·                 Available to first time landlords up to 65% LTV for Purchase only |
| ·                 Reverts to The Mortgage Works Managed Rate - currently 4.99% (variable) |
| ·                 Available for Purchase, Remortgage and Further Advance |
| Early Repayment Charge: 5% of capital repaid until 31.01.2012 Max LTV: 80% Arrangement Fee: 2.50% of loan (minimum £595)‡ |
| Â |
| 2 Year Fixed |
| Â |
| 5.99% until 31.07.2012, thereafter 4.99% (variable) 5.7% APR |
| ·                 Rental calculation based on pay rate |
| ·                 Available to first time landlords up to 65% LTV for Purchase only |
| ·                 Reverts to The Mortgage Works Managed Rate - currently 4.99% (variable) |
| ·                 Available for Purchase, Remortgage and Further Advance |
| Early Repayment Charge: 5% of capital repaid until 31.07.2012 Max LTV: 80% Arrangement Fee: 2.50% of loan (minimum £595) |
| Â |
| 3 Year Fixed |
| Â |
| 5.99% until 31.07.2013, thereafter 4.99% (variable) 5.8% APR |
| ·                 Rental calculation based on pay rate |
| ·                 Available to first time landlords up to 65% LTV for Purchase only |
| ·                 Reverts to The Mortgage Works Managed Rate - currently 4.99% (variable) |
| ·                 Available for Purchase, Remortgage and Further Advance |
| Early Repayment Charge: 5% of capital repaid until 31.07.2013 Max LTV: 80% Arrangement Fee: 3.00% of loan (minimum £595) |
Competition
Of course, Birmingham Midshires (or BM) is noted for their speed to mortgage offer and straightforward underwriting criteria (if you can pass their rigid ‘computer says no’ credit scoring). In some cases they can offer a mortgage within hours of the survey being carried out. Our record is 4 hours from survey to mortgage offer. This is because they rely heavily on their upfront scoring system to weed out the good from the bad. And the end result? It means you can have a mortgage offer in place before you step into the auction room. Or if you are buying a property you have secured below market value, it means you only have the legal work remaining, putting you in the same advantageous position as a 'cash buyer'.
The Mortgage Works will always find it hard to compete with BM on speed. This is because their control systems are lengthier. For example, a senior underwriter is nearly always required to sign off a mortgage offer before it's produced and sometimes this can take another week to process.
A rumour from the inside this week suggested that BM have set their computer to decline any applicant that doesn’t have an 900 Experian credit score or above. If this is true, it's a good way to reduce on business levels for the lender but not fair to borrowers who may have an impeccable record, but had too many credit searches over recent months.
Our View:
So what do we expect over the coming months? Well as this article goes to press Skipton building society has also plunged themselves into the spotlight being the first lender to enter back into the 95% LTV residential market since the credit crunch. This means that lenders are gaining confidence in (1.) The property market (2.) The liquidity of other banks. I expect to see some sort of challenge from Birmingham Midshires to The Mortgage Works over the coming weeks / month’s. It could be a half hearted easy option which would be to reduce their rates and stick at 75% LTV. If they want to retain their unique selling point, which over the past year has been the cheapest lender at the highest LTV, then they will have to bring out a new set of 80% LTV products. I wouldn’t be surprised if the boffins at BM are crunching numbers on their calculators as we speak pricing a new range of products. In any case, we are missing the point here which is quite simply that mortgage lending is easing up.
