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More business opportunities to be had in BTL

Whilst mortgage advisers deal with the bulk of buy-to-let business there is still a considerable amount of lending being placed directly with lenders, recent research by Foundation Home Loans has revealed.

The latest landlord research for Q3 showed that 73% of landlords carried out their most recent mortgage via an adviser and 19% went direct to a lender.

Jeff Knight (pictured) director of marketing at Foundation Home Loans, said: “In the increasingly complex and competitive world of buy-to-let mortgage lending, it seems somewhat surprising to hear that nearly 20% of landlords went direct to a lender for their latest mortgage, and 23% plan to go direct when they next remortgage.

“However comfortable you are with the market – and there are many portfolio landlords who might feel able to sort their own finances out – there is still the potential to miss out on a quality deal with benefits that only a mortgage adviser would be able to access, but as a landlord going direct you would not.

“That should surely be the message that advisers – and the wider industry – need to take to landlord borrowers because things do change very quickly, rates and criteria are shifting on a daily basis, and a landlord that thinks they’ve got the right mortgage for them, might actually be very far way from that outcome by not using an adviser.

“Once again, we collectively need to extol the value of quality advice, not just in a one-off transaction but across a borrower’s whole portfolio, because there are clearly huge benefits for portfolio landlords to take advice and to secure a much better financial position because of this.”

Nearly a third (31%) of landlords said they plan to remortgage at least one of their properties over the next 12 months.

Some 65% of those said they would expect to use an adviser and 23% would go direct to a lender.

Most landlords (48%) had followed a recommendation when choosing their adviser whilst 11% chose an adviser through an internet search and 9% chose through their membership of a landlord body.

HMOs continue to generate the highest rental yield for landlords at 6.5%, with 20% of landlords now having an HMO property within their portfolio.

Knight added: “It’s perhaps less surprising to see more landlords opting to put HMOs and multi-unit blocks within their portfolio, especially as the necessity of securing strong rental yield from properties has never been greater.

“As a lender active in the HMO space, we know how different they can be to other types of properties, and with last year’s licensing rules now in full effect it’s important that advisers are able to impart these types of details so the landlord knows their full responsibilities.

“We often have a situation where the criteria, income and mortgage requirements are different for HMO lending, and therefore advisers who want to be at the top of their game in this space should work with like-minded lenders, and ensure they are able to get the best deals for their HMO landlord clients.”

By Michael Lloyd

Source: Mortgage Introducer

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Buy-to-let mortgage lending for house purchase falls way short of forecasts

The trade body for the mortgage sector has warned that buy-to-let purchase lending is set to come in at below its forecasts for 2018.

UK Finance had predicted £12bn of buy-to-let lending for house purchase this year, but Jackie Bennett, director of mortgages, has warned this is heading for around £9bn.

Speaking at UK Finance’s annual mortgage conference, she said: “Our forecast for 2018 was for around £12bn for buy-to-let purchase. The market looks like it will considerably undershoot this, coming in more around £9bn.

“This is undoubtedly the impact of the various tax, regulatory and legislative changes that have happened to landlords in the buy-to-let sector.

“With the 2018 tax bills dropping through landlords’ letterboxes, or more likely in their inboxes these days, we are yet to see what further impact this may have on the market.”

She was more positive about the overall mortgage market, predicting gross lending would hit a decade-high of £270bn this year.

Bennett also expressed caution about the growth of online mortgage brokers.

She said: “The Financial Conduct Authority  wants it to be easier for customers to understand the products they may be eligible for earlier in the process. This is a laudable aim.

“However, as customers have ever more complex circumstances – multiple incomes, self-employment, contracting to name but a few – it is more difficult for any ‘tool’ to narrow down the products available for a particular customer. Based on our conversations with lenders it would take several hundred questions to ensure that all bases were covered.

“That’s not to say that technology developments won’t help more standard customers – they will do and they are – but I think we have to be realistic about what proportion of the market can be served in this way.”

Source: Property Industry Eye