Now I’ll freely admit that as a mantra it’s probably lacking some of the bells and whistles or management-speak that normally exists, however I think every stakeholder in the mortgage market would have to agree, it’s a good place to start.
Indeed, it’s the only place to start because without a commitment to this, everything that follows is absolutely meaningless. To that end, I have often talked about the requirements we look for within both a borrower and a deal and how a lender’s criteria should flow naturally from this.
So, as a buy-to-let lender we’re interested not just in the property itself, its rent-ability, and so forth, but also the borrower, their current borrowings, their homeowner status, their working situation, their income and, I’ll be blunt here, we’ll investigate that income fully to make sure they earn what they say they earn.
Three case studies which we have recently completed involved a HMO, a student let and a limited company – on the surface they might seem different but the fundamentals underpinning our lending to these individuals are pretty much the same. Prominent among those fundamentals is the provable income levels of those applicants, as a minimum we require that one borrower must have an income of £25k pa. Two of the three cases were from self-employed borrowers both with an income of £35k, while the company director had an income of £66k pa.
In order to prove this, employed applicants must have three months’ of pay slips and bank statements; self-employed applicants will need proof of their latest SA302 or signed accounts and six months’ bank statements (this includes sole traders, partnerships and company directors).
We also want to be confident about the employment status of our applicants, so employed people must have been in their current employment for the last 12 months, while self-employed individuals must have been trading for at least two years and a contractor must have been contracting for the same amount of time.
So, for us, it’s as much about the applicant as it is about the property. The two go hand in hand; it’s the reason that we don’t accept applications from first-time buyers.
If you’re not currently a homeowner I’m not certain buy-to-let investment should be your first move onto the property ladder. Some might take offence at that statement but I call it a common-sense approach.
Similarly, we are not going to lend to those with adverse credit. I’m all for the rehabilitation of borrowers who have found themselves in tough times and are now working their way out of that situation, however it’s not a part of the market we want to be involved in. Even those with the shortest of memories will probably be aware of the credit crunch and, quite frankly, I’m not interested in revisiting that particular period anytime soon.
Many lenders talk about a common-sense approach to lending which often goes down well with brokers and clients, until they have a case declined. To that end, our focus is being upfront and transparent about who we will lend to and what we will lend on.
Have a look through our criteria because you’ll get a strong understanding of the lending we want to do, the borrowers we want to work with, the properties we’ll lend on, and the vehicles that are acceptable to us. The important point is that we want to lend and will work exclusively through brokers to do this, but we won’t be straying from our criteria because that’s a path which is in no-one’s best interests to walk down.
Bob Young is CEO of Fleet Mortgages
