BTL flexibility won’t be around forever
BTL flexibility won’t be around forever
The buy to let second charge sector has thrived in recent years, largely because of the great flexibility it enjoys. We’ve seen countless examples of cases where mainstream lending hasn’t been able to provide a solution and second charge buy to let has saved the day.
One client, for example, was living and working in Australia with a buy to let property in this country but no credit history in the UK. The mortgage was interest only and the client wanted to raise funds to purchase another property in Australia. The mortgage brokers couldn’t arrange another interest only mortgage but we were able to complete an interest only second charge relying solely on the rental income for affordability.
In another case, we had a client looking to increase his buy to let portfolio but had no deposit so needed to take some equity out of the buy to let properties. However he was tied into the existing mortgages with high ERC’s. He was able to raise the deposit by second charges on multiple buy to let properties which allowed the introducing broker to arrange the buy to let mortgages.
These examples are just two of many that demonstrate the flexibility around a number of factors, from property type and construction to client age and income type that second charge buy to let affords borrowers.
However, this is about to change.
In January the first ream of new rules from the Prudential Regulation Authority will come into play. These new regulations will make it more difficult to place buy to let cases with stricter stress testing and tighter criteria. Indeed, some lenders are already tightening the screws in readiness.
Brokers should be contacting any buy to let clients looking to make an application now to prompt them to act quickly. The flexibility on offer via second charge buy to let won’t be around for ever, make the most of it while you can.
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. We may receive commissions that will vary depending on the lender, product, or other permissable factors. The nature of any commission will be confirmed to you before you proceed.
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