Chorley quit the sector 18 months ago when it achieved its back-book target and prior to the introduction of tax changes.
Now the society is returning with a similar offering to lend up to 80% loan-to-value (LTV) and targeting those with three properties or less.
In an interview with Mortgage Solutions, Julie Goodwin, head of business development at Chorley said: “Whenever we went out to meet with our brokers and network partners, they asked ‘when are you going back in’? So the demand picture looked good.”
Portfolio lending
Goodwin dismissed concern the buy-to-let lending market has become saturated. She said: “Other lenders aren’t pulling out and many are going for the larger portfolios.
“We’ve gone for the smaller end [those with three properties or less] as it fits more with what we are about, and with the Prudential Regulation Authority (PRA) portfolio changes, it’s a more simplified process than dealing with people with larger portfolios.”
Stricter underwriting requirements now apply to borrowers with more than three mortgaged buy-to-let properties.
Goodwin said another selling point was that the society does not use credit scoring software. “We manually underwrite, in other words a staff member makes the lending decision not a computer.”
Goodwin said buy to let had always been one of the society’s higher margin business segments.
The key features of the product are:
- Discounted variable rate of 3.99% for the first three years. It then changes to a standard variable rate, currently 5.24%, for the remainder of the term.
- Available for loans up to 80% LTV
- £195 application fee
- Early Repayment Charge applicable
Chorley’s buy-to-let criteria is:
- Minimum age of 25 and there is no maximum age limit for any application
- Minimum loan size of £80,000 and a maximum loan size of £1,000,000 subject to LTV
- Minimum term of three years and a maximum term of 40 years
- Available to customers who own no more than three buy-to-let properties and intend to use the property for investment purposes only
- Minimum rental yield cover of 125% of the stress tested mortgage interest payment for basic rate taxpayers and 135% for higher and additional rate taxpayers
- Property must be located in England, Scotland or Wales.
