Please see our interview with Buy To Let finance expert and mortgage broker – Mike Fisher (Landlord Finance) – who kindly took the time out of his busy schedule to answer some questions:

“With recent reports of upward house price movements, is the mortgage market reflecting the positive news or are lenders still taking a bearish view?”
Lenders are still very cautious regarding property prices and the current mortgage market very much reflects this. My belief is that it may take about 12 months of continuous reports of house price increases and/or stability before the lenders relax their attitudes and take a more positive approach. Saying that, investors are currently able to cherry pick some excellent deals and, if you find the right one, we are sure we can find you the right product.

“It’s been some 6 months that interest rates have remained at 0.5% and LIBOR rates are comparatively low too – what are you seeing in the mortgage market?”
The good news is that BM Solutions have become far more aggressive with products starting from 4.10%. Recently I learned that up until mid-August this year they were agreeing lending of around £18 million pounds per day but they are now looking to increase lending to around £28 million pounds per day. However, they have some way to go to get back to the £80 million pounds worth of lending per day prior to the credit crunch. Nevertheless, it’s good news all the same and at least there are signs that things are moving in the right direction.

“What about LTV levels – looking at the rates, they seem to be remaining at the 75-50% level?”
Yes, the maximum LTV available on Buy To Let is 75% but generally speaking the lower the LTV you can cope with, the better the rate of interest/product will be. I have heard some potential good news on the horizon though – there are rumours circulating that one of the main players in the BTL market is looking to increase their average LTV to 80%. Although this is strongly denied by them, the rumor doesn’t seem to want to go away – as the saying goes: “there is no smoke without fire!”

“We’ve noticed a number of investors becoming interested in purchasing new builds (particularly as they can now be bought at 50% below the market peak) – what sort of financing is available for them?”
Most lenders are still very cautious about lending on new build apartments and many choose to either not lend at all on this type of property or severly restrict the LTV level. Presently the best I can see on offer is a maximum LTV of around 70% with the lender restricting the exposure limit to no more than 20% of the block. So if there are 20 apartments in the block, the lender would consider lending on 4 of them. However, investors should bear in mind that they would not be comfortable if all the 4 apartments are on the same floor level; adjoin each other and are also on high rise developments. New builds are tricky but not unworkable – the best thing to do is contact us and we can run some basic checks.

“Many investors are commenting that it remains difficult to get the right kind of valuation in place – mainly due to the fact that there are so few sales at the moment. Do you have any tips for getting the right valuation first time?”
Yes, this can be a problem in today’s market but there are a few suggestions. Other than using excellent valuation tools such as ‘Hometrack’, Landlord Finance is happy to have an off the record chat with a ‘Colleys’ surveyor who covers the area where the property is located – he or she is usually in a good position to give us an indication of what type of figure we can expect. Bear in mind that this is by no means definitive as the valuation result is still subject to them actually visiting the property (once inside, their opinion can change for the good or bad). You may also wish to look into getting a ‘test valuation’ booked – you will have to pay for a full valuation if you decide to proceed afterwards but it will give you an accurate indication (as they are undertaken by RICS approved surveyors).

“What are the best / most popular products at the moment?”
At the moment the most popular products are as follows:
At 75% LTV
1yr Tracker @ 4.35%
2yr Tracker @ 4.70%
2yr Fixed @ 5.40%
At 70% LTV
1yr Tracker @ 3.99%
1yr Fixed @ 4.29%
18 month Fixed @ 4.89%
18 month tracker @ 4.19%

“How long is it, on average, taking for your cases to go through at the moment?”
It depends on the choice of lender really; with BM Solutions the process is very much automated and if everything goes well with the valuation and the figures are returned as expected then I have acheived mortgage offers within 3 working days. If it’s another lender such as The Mortgage Works (TMW) then a more manual process is adopted and on average it takes about 5-10 working days to obtain the offer.

“Any new lenders coming into the fray? What are they offering?”
One of the new lenders around is The Bank Of China who are offering up to 65% LTV; with a tracker rate of 4% and a 1% arrangement fee. This lender does appear to be reverting to old fashioned underwriting methods and insists on personally interviewing applicants at one of their regional offices located around the UK. Depending on your view, this may not be a bad thing as meeting someone face-to-face often gives a better picture of who you are and what you’re about rather than just assessing you via a computer programme. Good news all the same…

“What advice would you have for a new investor entering into the market at the present time?”
Do your due diligence – will the property you are intending to purchase have a steady flow of tenants and let out relatively easily (and therefore cash flow well enough long into the future)? Make sure that the property is both habitable and lettable in its present condition – so it must have a bathroom and a kitchen of some description and be able to support normal habitation; if it isn’t then you will not get through the standard BTL terms offered. As well as checking the open market value, speak to letting agents (a minimum of three) but be weary of those that are also estate agents as quite often there will be a conflict of interest. Always ensure that you are buying below market value – most investors I am working with are currently purchasing between 15-30% below the RICS survey result.

“So, if people reading this want to find out more about Landlord Finance – how do they get in touch?”
Call 0845 140 40 50 or 07956410612 or email mike@landlordfinanceltd.com for a speedy response.