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New lender Foundation details launch range for small professional landlords

by: Samantha Partington
  • 19/02/2015
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New lender Foundation details launch range for small professional landlords
Foundation Home Loans (FHL), the latest new lender to plan its mortgage debut in the buy-to-let sector, has revealed it will come to market with a range aimed at the amateur landlords.

Rates will start from 3.75% and two ranges will be available to borrowers; prime and light adverse.

Prime loan-to-values (LTV) will go up to 75% while light adverse is 70%. Fees can be added onto the mortgage balance but cannot exceed 80% LTV.

The lender wants to keep tight control over its distribution but owing to a due diligence process still underway, FHL would not disclose the names ahead of its launch date on Tuesday 24 February.

Brokers will receive a procuration fee of 0.40% for placing business through one of the selected partners.

The prime range will accept borrowers with any amount of historic County Court Judgements (CCJs) and defaults, if registered over two years ago and have been satisfied.

Light adverse products cater for landlords who have up to £2,000 of CCJs or defaults registered in the last 24 months but none in the last 12 months.

Hans Geberbauer, chief executive of Paratus AMC, the parent company of Foundation Home Loans, said: “FHL plans further product launches aimed at first-time landlords, expats and limited companies.

“We will be looking to exploit our foreign relationships, for example, through our Spanish and Germany operations.”

There is no minimum income requirement which Geberbauer said was ‘meaningless’ as a measure of an landlord’s ability to service a loan if the rental income had been stressed sufficiently to make sure the tenant’s payment comfortably covered the mortgage payment.

FHL will use a stress test of 125% of a 5.25% for prime cases and 125% of 6% for light adverse.

Three months bank statements will be requested but will be used to assess overall account conduct, not for income and outgoings checks.

On the FHL’s decision to work to a maximum age of 85, Geberbauer said: “Our reason for extending the range to investors up to the age of 85 is partly to do with the pension freedoms so we are able to offer mortgages to retirees looking to invest in the property market as part of their pension plan.” 

Landlords can have up to 10 properties with FHL but no more than three can be in the same postcode. Borrowers can have an unlimited number of properties with other lenders.

Properties must be based in England and Wales.

“We are hoping to convince our brokers through the certainty of our delivery. We want to become the most trusted lender in the buy-to-let market,” said Geberbauer.

Paratus AMC bought the GMAC RFC mortgage back book and platform in 2010.

FHL is the start of its move into mortgage origination in the buy-to-let market.

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