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BTL changes leave brokers in ‘strong and pivotal position’ – Bob Young

by: Bob Young is chief executive officer of Fleet Mortgages
  • 21/06/2017
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BTL changes leave brokers in ‘strong and pivotal position’ – Bob Young
I often get the sense that landlord borrowers are much more in tune with the financial costs that come with their mortgage than residential customers.

For example, if possible they will look to remortgage to a better deal when their existing one ends.

I write “if possible” because undoubtedly there will now be buy-to-let borrowers who find the deal they secured two or three years ago is simply not available to them post-Prudential Regulation Authority (PRA) underwriting changes.

In that sense, the issue for borrowers may not be inertia-led, instead it will be an inability to secure the same types of deals.

They will want to remortgage but the question is, what sort of product are they able to remortgage to?


The extra mile

Of course, here is where the adviser is going to secure their fee.

While there may appear few options for that client, in reality, given the competition in the sector and the need to secure business, we are already seeing a lender sector (particularly in the individual landlord space) which is quite willing to go the extra mile to secure the deal.

Whether that provides the ability for the landlord to capital raise is another matter.

But, like-for-like remortgaging on competitive rates is not beyond the realms of possibility.

Rock bottom rates

The big question appears to be how long these types of competitive rates are going to be available for?

I noticed on this very site, Ying Tan suggesting that rock bottom rates wouldn’t be around forever, and of course he’s right, but it’s uncertain how long they will be around for.

I see no evidence to suggest that mainstream buy-to-let lenders are going to stop using price as a means to bring in more business, particularly when it comes to remortgage business.

What might, of course, be a sticking point for these lenders is their approach to the PRA portfolio landlord underwriting changes, which will go live from the end of September.

At the moment, advisers and their portfolio landlord clients simply don’t know how these changes will be introduced or dealt with.

With only four months to run until then, I might well agree that now would be the time to take such clients through their mortgage process.


New reality

Whatever the reality of that new environment, advisers find themselves in a strong and pivotal position with their buy-to-let borrowers.

They also have the added benefit of having a range of specialist lenders where there will be no changes to portfolio or individual or limited company lending approach, regardless of the PRA changes.

That should be worth its weight in gold and means brokers should be able to secure the finance their clients need, without having to worry about what is coming over the horizon, providing of course these clients are able to meet the necessary criteria and underwriting standards.

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