Vida tweaks contractor criteria among product overhaul and rate cuts
It has also made notable changes to its criteria and cut interest rates on many products.
On its residential offering the affordability criteria for self-employed contractors has been set to day rate times 46 weeks.
Rates were cut for residential interest-only loans of more than £1m and on the joint-borrower, sole-proprietor Helping Hand range, excluding the Free Saver products.
In buy-to-let, the cap of a maximum 100 properties in a portfolio was removed and income and employment verification requirements have been reduced for self-funding BTL landlords.
Rates were reduced for first-time landlords on loans of more than £1m, homes in multiple occupancy (HMOs) and multi-unit blocks (MUBs), excluding its Free Saver.
Finally, the lender’s credit status tier structure has been simplified to make it easier for brokers to find products suited to customers with “impaired and improving credit profiles,” it said. Hire purchase payments will be treated as unsecured loans.
‘Simplify our offering’
“This is our most significant product change since we launched three years ago,” said Lousia Sedgwick, director of sales, mortgages, at Vida Homeloans (pictured).
“We want to make specialist mortgages simple and to streamline so that it’s easier for brokers to do business with us.
“We’ve always listened to feedback and made improvement and now it’s time to simplify our offering for brokers.
“We continue to see strong demand from our intermediary partners and want to continue growing our lending and offering a great service to brokers and customers,” Sedgwick said.
The changes were brought in following Vida’s launch in September of a BTL broker platform with eTech, which aimed to improve the BTL portfolio underwriting service.
Fleet shifts on a number of BTL criteria in bid to match changing market needs
The lender increased its maximum loan size to £2m at 75 per cent loan to value (LTV) and £1m at 80 per cent LTV — excluding homes in multiple occupancy, multi-unit blocks and flats over commercial premises.
The minimum property value has been reduced from £75,000 to £50,000, subject to a maximum 70 per cent LTV up to £74,999.
Fleet will lend up to £5m to each borrower, comprising £2m at 80 per cent LTV and £2m to £3m at 75 per cent LTV.
The lender will consider properties above or adjacent to commercial premises, subject to the valuer’s assessment of the security.
It will consider cases where there’s a connection between freeholder and leaseholder, as well as applications where a connection exists between buyer and seller.
Finally, Fleet will now accept gifted deposits from direct family members, whether mother, father, grandparents or siblings.
“It’s vitally important to listen to adviser partners when it comes to lending and product criteria, especially when the buy-to-let market is shifting and we’re seeing far creating activity levels particularly from portfolio and professional landlords,” said Steve Cox, distribution director at Fleet Mortgages (pictured).
“These enhancements will ensure advisers have an added layer of flexibility to offer clients and send the message that we can accommodate many different types of property, situation and landlord financial needs,” he added.
Protecting a landlord’s portfolio: the key points to consider – Berkeley Alexander
However, whether these portfolios are owned by limited companies or by individuals, we still see many brokers arranging separate general insurance policies on each property when a single block policy may well serve the customer better.
A portfolio landlord’s block policy offers protection for all properties within its scope, and they can cover both standard and more complex non-standard risks under one policy.
They are invariably cheaper than separate policies and much easier to manage. One policy, one payment, one renewal, and one place to go to make a claim – a time saver that I am sure these very important clients will thank you for.
What does a landlords’ block policy typically cover?
Property damage: The policy will cover each property against damage to the buildings, and (when needed) landlords’ contents, whether it be for communal areas or any furnished accommodation.
All policies should cover the main perils, such as fire, escape of water, flood, explosion, earthquake, impact by vehicles, etc. Others, such as accidental damage, subsidence, landslip & heave, or malicious damage by tenants is not always automatically covered, so check cover is in place if required by the customer.
Liability: Every landlord has a legal liability to the public, including their tenants, and should have Property Owners Public Liability cover included. Any limited company landlords must have Employers Liability, and all landlords may also need Employers Liability if they directly employ staff to help with building management or maintenance, for example.
Loss of rent: If one of the properties were to become uninhabitable due to fire, flood or another insured peril, it could take time to complete the repairs. Whether the property is a residential or commercial unit, the rent received from the tenant(s) or occupier could also cease due to the incident. Choose a policy that includes loss of rent for these circumstances, with a tailored indemnity period of up to three years from the date when the loss occurred.
Some policies can also cover the costs of alternative accommodation for residential tenants while the property is uninhabitable following an insured damage claim, allowing the tenant to continue to pay their rent and be re-housed for the duration of the tenancy agreement.
Whether it is an extension to the main property insurance, or purchased as a standalone policy, there are a host of additional covers a landlord may choose. These include, but are not limited to:
Legal expenses: to cover the costs of any legal disputes around the ownership or letting of the property, including any tenancy disputes;
Rental protection: while all good policies provide loss of rent in the event of a claim on the buildings section, insurance can also be arranged to cover loss of rent due to a default by the tenant;
Engineering inspection: if the property has plant or machinery, such as a lift, it may require annual inspection. A policy can be arranged to cover these statutory obligations;
Engineering material damage: specialist cover may need to be arranged depending on the nature of the plant or machinery which may be excluded from the main policy;
Directors and officers, or management liability insurance: providing cover for the landlord against their statutory obligations, including health and safety breaches;
Claims assistance: while every insurer should provide a fair claims service, on the larger claims, there can be significant impact to the client during the claims process. A claims assistance policy provides the client with their own loss adjuster to help in the claims process, but also to ensure the insurer is treating them fairly.
Vida Homeloans develops portfolio buy-to-let hub
The lender worked with eTech to design the new portal with the aim of improving its BTL portfolio underwriting service.
The platform can display all live mortgage applications on one dashboard and allows brokers to add new portfolios based on previous application data.
This will improve efficiency by allowing for duplicate jobs, the lender said.
Brokers can import data from Microsoft Excel spreadsheets or through Vida Homeloans property portfolio schedule, and Energy Performance Certificate (EPC) ratings for each portfolio are displayed, which are updated automatically from the EPC Register.
“The new hub incorporates innovative features to enhance the experience for brokers dealing with BTL portfolios. It will equip brokers with the right tools to drive their business forward and to help customers who are under-served by high street banks,” said Louisa Sedgwick, director of sales, mortgages, at Vida Homeloans (pictured).
Liz Syms, owner of Connect Mortgages and Connect for Intermediaries added: “The BTL hub improves the time it takes to underwrite portfolios resulting in speedier applications. Vida Homeloans is demonstrating its commitment to improving the process for brokers and clients by offering this option.”
BM Solutions extends portfolio BTL property and value limits criteria – exclusive
In April, Specialist Lending Solutions revealed that the lender was looking at its options in this area and it has now confirmed an extension of these limits.
From 12 August, BM Solutions will increase the maximum number of buy-to-let mortgages from three to five with Lloyds Banking Group, as well as the maximum value of buy-to-let mortgages from £2m to £3m.
The portfolio limit will remain at 10.
And following a pilot, a web chat service will also be available to help brokers with queries, providing real-time support and an alternative point of contact for business development managers.
Phil Rickards, head of BM Solutions, (pictured) said: “With improvements delivered to our portfolio underwriting proposition, now’s the right time for us to take our next step to bolster the buy-to-let market – and demonstrate our ambition to be the brokers’ first choice.
“Along with greater choice and flexibility for landlords, making web chat live for brokers means we can provide help and support in the ways that they want, when it best suits them.”
Hodge opens portfolio buy-to-let to whole of broker market
The lender’s proposition offers one loan to manage an entire residential property portfolio with a minimum loan size of £250,000 and maximum loan term of 25 years.
It is available to UK registered limited companies and limited liability partnership (LLP) structures and comes with an initial five-year fixed rate from 4.2 per cent.
Once the five-year term is over, the loan switches to the Hodge Standard Variable Rate as with residential mortgages.
Hodge said it had deliberately created the product for acquisitive landlords seeking to grow their established portfolio, trade assets, or utilise their portfolio equity to support new purchases.
It added that after launching in May through limited distribution, the level of interest and volume of queries had been such that it decided to extend to whole of market
Appetite from landlords
Matt Burton, managing director of mortgages at Hodge, said the decision to make the product available through intermediary networks was in response to the incredible number of enquiries received since 8 May.
“With such appetite from landlords, and due to our commitment in supporting advisers, we’re delighted to be offering this product to whole of market and taking great strides towards extending our product offering,” he said.
Legal & General Mortgage Club head of lender relationships Danny Belton said: “Hodge has shown before it’s not afraid to enter into new markets and done so with a good degree of success.
“This new buy-to-let offering looks to be no exception. It’s a proposition that offers much-needed criteria to certain areas of this market and will add value to landlords and advisers alike.”
Complete FS and Interbay seal £21m remortgage and incorporation of 100 properties
The packager said the complexity of the case required close working alongside the client’s mortgage broker, tax adviser and the lender.
Interbay, which is part of OneSavings Bank, agreed a bespoke deal for the customer due to its scale.
Complete FS’ director Damian Cain said ensuring the tax situation was correctly addressed was vital.
“Due to the complexity of this deal, we requested the adviser work closely with the customer’s tax specialist to ensure that a limited company structure was indeed the right solution and that the correct procedures were followed to make it happen,” he said.
“At the same time, we looked at all the potential remortgage options and having talked it through with some of our lenders, we decided to opt for Interbay as they had the ability, expertise and experience to assist with such a large and complicated case.”
One of our larger loans
OneSavings Bank sales director Adrian Moloney said the lender had formed a good working relationship with Complete.
“This is one of the larger loans we have provided and due to its complexity, required close and open co-operation between Complete and ourselves to ensure the right outcome was delivered for the customer and met his adviser’s requirements,” he said.
“We are delighted to have been able to assist and provide a solution, which might very well have not happened without the relationship between us and Complete FS.”
Choice Mortgage Solutions director Chris Croake added that he was pleased with how the deal was handled and the outcome for his client.
Dangers of unregulated lenders pushing buy-to-let boundaries raised at NACFB
Leaders from One Savings Bank and Paragon Bank highlighted concerns with how some non-bank lenders were taking advantage of operating outside the Prudential Regulation Authority (PRA) rules.
Those lenders who are not regulated by the PRA are not compelled to follow the changes introduced on portfolio lending last year, however some have chosen to do so.
Speaking at the National Association of Commercial Finance Brokers (NACFB) Commercial Finance Expo 2018, Paragon Bank director John Heron (pictured) feared taking advantage of this regulatory divergence could have significant consequences.
“There are some really significant changes to the market but it’s not without its dangers,” he said.
“We are seeing non-bank lenders starting to see a regulatory arbitrage available which some will take advantage of, and this may not work in the best interest of landlords or indeed the wider finance community.”
Pushing of boundaries
Heron was supported by One Savings Bank sales director Adrian Moloney, who also raised concerns about this approach.
“I do agree with some of the points on non-bank lenders,” he said.
“We saw a lender launch its portfolio proposition a few weeks ago and it was only going to stress limited company buy to lets in the background and that’s the part which is probably going to be least effected.
“So I do see some pushing of boundaries there,” he added.
Buy To Let Market Forum: Beware creating mortgage prisoners when placing portfolio clients
Speaking at the Buy To Let Market Forum in Cardiff earlier this week, Mortgages for Business CEO David Whittaker noted that lender product retention and transfer strategies were increasingly important as background portfolio requirements continue to change.
Whittaker highlighted that if a lender did not have some sort of a product retention or transfer strategy then at the end the fixed-term period, if the portfolio no longer fitted the “new norm”, it may be impossible to refinance the loan.
“You may have created a mortgage prisoner,” he warned.
“They may end up going on to that lender’s back book, which will inevitably end-up being at a rate of Libor plus 4.5% or whatever figure is appropriate.”
Lenders need to step up
Whittaker also used the opportunity to encourage those lenders without a retention strategy to get themselves in order.
“I really think it’s important that the one or two lenders that don’t yet have a solid product retention or transfer strategy need to step up and produce something,” he continued.
“We can talk about commission endlessly and what they should or shouldn’t be paying, but if they don’t have a strategy and you inadvertently put your client into the mortgage prisoner position that’s something you need to think carefully about.”
After a show of hands by the audience, Whittaker also noted that “we’re starting to see some numbers coming through of borrowers being stuck.”
Aldermore and Foundation shake-up buy-to-let rates
Aldermore is to cut rates for company landlords, aligning the deals with the lender’s buy-to-let range for private individuals, from 23 April.
The lender is also reducing its early repayment charges and offering new remortgage deals with no product, valuation or legal fees.
As part of the changes, rates for multi-unit freehold and houses in multiple occupation (HMO) are to start from 4.38% for a two-year fixed-rate purchase and remortgage up to 75% loan to value (LTV).
The lender is also now considering one year’s accounting information to suit self-employed landlords who have only been trading for a short period of time.
Charles McDowell, Aldermore’s mortgages commercial director (pictured), said: “The buy-to-let sector plays an important role in the housing market so we are delighted to announce these latest changes, which provide further support to landlords.
“The sector has experienced significant change recently, so we regularly review our products to ensure we continue to support a broad range of customers, no matter how big or small their portfolio is.
“We also aim to ensure we provide the highest level of service to our brokers, so we are launching a fully responsive broker portal, accessible from smart phones or tablets.”
From April 23, the new portal will enable brokers to complete an illustration and help get a quote or submit a decision in principle for their client using any device.
At the same time, Foundation Home Loans has launched a standard plus five-year fixed-rate deal across its buy-to-let range, available for a limited time.
The deal has a fixed-rate of 3.54% at 75% LTV and a 2% arrangement fee and an interest cover ratio (ICR) of 145% times pay rate for individuals and 125% times pay rate for limited companies.
Portfolio and non-portfolio landlords without any adverse credit within the last six years can apply for the product.
Andrew Ferguson, commercial director at Foundation Home Loans, said: “We are committed to providing competitive products and service to intermediaries, designed to offer them far more choice and ease the process of working with their landlord clients.
“With the rental assessment based on the pay rate, we are sure these new products will appeal to many portfolio and non-portfolio landlords.”