InterBay Commercial cuts rates across buy-to-let range
Rates begin at 3.99 per cent for its two-year fixed deals and five-year fixes start from 4.19 per cent. ERCs will be set to four per cent for the first year of the fixed rate period, then drop to three per cent for the remainder of the period.
The lender will accept multiple properties on a single loan and lend up to 80 per cent loan to value (LTV).
There is no maximum loan amount and no maximum property value. Company and complex ownership structures will also be considered.
Emily Machin (pictured), head of specialist finance at InterBay Commercial, said: “It’s apt that as the industry celebrates 25 years of buy to let, that this product launch marks our absolute commitment to the buy-to-let market. We’re certainly looking forward to creating tailored business solutions for our broker partners.
“We’ve earnt a strong reputation for building robust relationships and delivering innovative buy to let solutions for complex and multifaceted deals and this launch means we’ll be able to do even more.”
Why semi-commercial could offer a tasty alternative to standard buy to lets – Moloney
There’s a newsagents, a hairdressers, a small supermarket, and, for a year or so, one that had laid empty with a ‘for sale’ sign on the wall outside.
However, when the restrictions imposed during the first lockdown were gradually eased last summer, something strange happened. The sign was taken down, decorators and shop fitters moved in, and within weeks the place was re-opened as a takeaway, with a two-bedroom flat above it.
While the rest of the UK housing market was slowly getting back on its feet, someone had recognized the potential for the property as a takeaway and residential accommodation, and taken the plunge into the world of semi-commercial letting.
And by the look of the socially distanced queues stretching out of the door most nights as people patiently wait for their takeaways, it’s certainly been a successful investment.
If you’re not familiar with semi-commercial properties, or mixed use properties as they’re also sometimes referred to, they’re simply rental properties that combine residential properties with an element of commercial use.
This could include, for example, flats above shops, restaurants or offices; guest houses with accommodation for the owners; public houses with self-contained accommodation; or buildings with both self-contained flats and offices.
Professionalisation of the market
With the buy-to-let market becoming professionalised in recent years, interest in semi-commercial has increased as canny investors explore different property asset classes and look to adopt different investment strategies.
This could be a smart move.
In my opinion, with their potential to earn higher rental yields compared to a standard buy to let, semi-commercial properties could give experienced landlords a different way to maximise their investments and provide a useful stepping to investing in the commercial property market.
I believe they also offer a way to mitigate risk as if a landlord experiences issues with one property, the performance of others in their portfolio can make up for any shortfall in rental yield.
Of course, as with any investment, there are things which landlords need to take into careful consideration before making the move into semi-commercial. The initial outlay and running costs can be higher compared to a standard buy to let, and a vacant commercial space will still incur business rates.
Another problem landlords may encounter is finding a mortgage with a lender experienced in dealing with semi-commercial cases. Semi-commercial can be complex as they fall into the middle ground between commercial and residential borrowing.
The good news is that there are lenders out there who specialise in semi-commercial mortgages and who can offer products specifically designed to meet the needs of investors.
With landlords constantly looking for new investment opportunities, semi-commercial letting could offer them the ideal way to diversify their portfolio.
And with the right lender on their side to help them make the move into a new market, they could soon be benefitting from the best of both the commercial and residential worlds.
OSB Group MD Alan Cleary to retire
Cleary (pictured) has worked with the OSB Group, which is the parent of Precise Mortgages, Kent Reliance for Intermediaries and Interbay Commercial, since 2019 when Charter Court Financial Services (CCFS) combined with OneSavings Bank.
He has worked in the mortgage intermediary market for around 30 years, working at HBOS, Edeus and Exact Mortgage Experts, according to his LinkedIn profile.
Cleary said: “I have loved working in the intermediary mortgage market and have made many friends. I leave OSB Group with fond memories, but I feel now is the time for me to spend my time outside of work with family and friends.”
OSB Group’s chief executive officer said: “Since the point that OSB combined with CCFS, Alan has played a significant role in the successful integration of the two businesses and we’ll miss having him as part of the group executive committee.
“He has all of our very best wishes for a happy and healthy retirement and ahead of the date that he leaves the group, we’ll be working hard to identify an appropriate successor.”
Know Your BDM: Stephen Wrigley, Precise Mortgages and InterBay Commercial
What locations and how many advisers and broker firms do you cover in your role?
I cover the M4 Corridor then up to Leicester in the Midlands. I look after a number of key partners along with anyone else who wishes to talk about bridging or commercial finance products across Precise Mortgages and InterBay Commercial.
How have you changed the way you establish and maintain a good relationship with brokers in the pandemic?
Invariably like many others, I’ve had to switch to video conferencing which at least allows for some face-to-face interaction and my phone has been glued to the side of my head for the last year. I’ve looked to stay in touch with my major accounts on a weekly basis but my broker base knows that I’m only ever a call away.
What personal talent/skill is most valuable in doing your job?
From all the different factors that makes someone a good BDM, I believe the most important is the ability to positively communicate with people at all levels. To do this effectively it means being up to speed in terms of criteria for your own lender as well as the rest of the market so an ability to retain detailed information is also important.
What personal talent/skill would you most like to improve on?
To be able to hit a golf ball. I’ve lost count of the number of golf days I’ve been invited to over the years but have had to politely decline. But anyone in need of a buggy driver, then I’m your man.
Where would you rather be stuck, in bumper-to-bumper traffic or back-to-back Zoom calls?
Ideally, I’d rather be on the move as that’s an aspect of the job that I’ve really missed. I still think face-to-face meetings will play a huge part in our business moving forward as you lose some of the personal interaction on a video call.
Clearly however the world has changed so I can see there being a mixture of both in the future and of course we’ll work to broker’s preferences.
What’s the best bit of career-related advice you’ve ever been given?
If you don’t feel slightly uncomfortable in your existing role then you probably aren’t being challenged enough. There’s always room for learning and improving no matter what your age or level but it’s important to keep a goal in sight.
What is the most quirky/unique property deal you’ve been involved in?
It was actually during my time as a broker when I was dealing with a first-time buyer mortgage for a property in York. It transpired that the property, a former accountancy practice, had Roman skeletons in the basement so it was designated a national monument.
What has been your lockdown coping strategy?
I’m not sure red wine is the correct answer? I’ve set up a home gym in the garage, worked on the garden and started a new hobby “trying” to make house music – lots of fun but not as easy as it sounds.
If you were head of the FCA for the day, what would you change about regulation in the mortgage industry?
Whilst there are a few small changes I might make, I know that those regulations are there to protect customers and have their best interest at heart which I’m fully supportive of.
What was your motivation for choosing business development as a career?
I really enjoy the variety the role brings. I’m fortunate to cover a wide range of specialist lending products spanning across Precise Mortgages and InterBay Commercial so no two days are ever the same.
If you could do any other job in the property sector, what would it be and why?
I’d love to be a developer as it’s so inspiring to see some of the fantastic end results and I’ve always fancied giving it a shot.
What did you want to be growing up?
David Attenborough. Loved anything to do with wildlife although I’m not sure my Bristolian undertones would cut it.
What’s your favourite face mask design/pattern to wear?
Here’s a question I never imagined I would be asked. I guess my Precise Mortgages one is the right answer for today but tomorrow it will probably be InterBay Commercial!
And finally, what’s the strangest question you’ve ever been asked?
Apart from the one above, I was once asked if a client should include all of his livestock on an assets and liabilities form as he was a farmer. I’m not quite sure how the underwriters would view that one.
InterBay launches holiday let products
The two and five-year fixed rate mortgages are available for individual and limited company landlords at up to 70 per cent loan to value (LTV).
The two-year deal has an interest rate of 3.84 per cent and the five-year version is at 4.29 per cent, loans are available between £50,000 and £1m, and an interest-only option is also available.
A £145 application fee applies along with a 1.5 per cent completion fee, and both deals have early repayment charges (ERCs) of four per cent in the first year and three per cent in all remaining years.
No occupancy restrictions apply, although applicants must be an existing landlord and a minimum income of £30,000 is required per application.
The minimum interest coverage ratio (ICR) and stress rate requirements are 140 per cent using gross rent, with rent calculations based on a letting period of 30 weeks a year at an average of the low, mid and high season rates.
Adrian Moloney, group sales director of OneSavings Bank, noted that with more people looking at staying in the UK as a result of the pandemic, there had been a big increase in demand for holiday let accommodation.
“To help experienced landlords meet this demand, our new proposition could be ideal for those who are operating through a limited company structure, have complex set-ups or are thinking of purchasing a property that doesn’t fit the sometimes narrow criteria found on the high street,” he said.
OSB sees mortgage lending fall 40 per cent and books £20m fraud loss
The lender also booked a £20m loss in its provisional results due to a suspected fraud through one of its outgoing asset finance funding lines, discovered last month.
OSB head of investor relations Alistair Pate confirmed to Mortgage Solutions that the suspected fraud did not involve any of its property funding, which makes up around two-thirds of its £176m in funding lines.
“This particular business where we think something went wrong is in administration now,” Pate said.
“The administrators there have done a really good job and given us and our auditors enough comfort to place a £20m charge in the results.
“As there are legal proceedings underway we have to make sure not to prejudice that – both the fraud squad and regional police are involved,” he added.
An internal review has been completed examining all the lender’s funding lines and policies and it believes there are no other systemic risks present, suggesting this was an isolated one-off case.
OSB has its own asset finance business as well, but does not believe the same risks exist there as in that case it buys the equipment and then leases it back to the customer.
There is also not believed to have been any internal co-operation or assistance in the suspected fraud.
An external review is now being conducted which will further examine the lender’s policies and procedures and then compare them to best practice. It is expected to report its findings to the board in around four weeks.
Pate added: “While this is relatively small compared to our entire £19.2bn loan book, we do take it very seriously.”
BTL lending hit hardest
OSB completed its merger with Charter Court Financial Services (CCFS) in October 2019, bringing together the Kent Reliance and InterBay Commercial brands with the parent company of Precise Mortgages.
The mortgage lending total of £3.8bn, which includes the CCFS Precise Mortgages brand, was down 41 per cent on the combined £6.5bn figure for these firms during the whole of 2019.
Buy-to-let and other non-owner occupier property lending was the hardest hit, down 46 per cent to £1.54bn from £2.85bn at Kent Reliance and InterBay, and down 41 per cent to £1.12bn at Precise.
Residential lending, which is a smaller part of the firm’s book, was down 34.5 per cent to £354.2m at Kent Reliance and InterBay and down 28 per cent to £573.9m at Precise.
OSB directly attributed these drops to the pandemic and said it chose to prioritise underwriting standards instead of volume when markets recovered.
Loan losses up £68m
It also increased its allocation for expected losses through property loans by £68.2m to £111.8m – with the buy-to-let and SME lending losses at Kent Reliance and InterBay expected to grow sharply from £21.6m to £67m.
But the lender added that balances more than three months in arrears remained stable at 0.9 per cent of the book and noted the majority of customers granted Covid-19 payment deferrals had resumed payment.
Payment deferrals peaked in the second quarter at 26,000, representing 28 per cent of the loan book by value, but by 31 December active deferrals accounted for only 1.3 per cent of the group’s loan book by value.
Overall, underlying profit before tax decreased by nine per cent to £346.2m in 2020 from the combined OSB and CCFS figure of £381.1m in 2019.
New business volumes recovered
Andy Golding, CEO of OSB Group (pictured), said the firm entered 2020 with a robust pipeline and application levels in its core businesses were strong prior to Covid-19.
“The initial lockdown inevitably impacted application and completion volumes in the second and third quarters, mirroring the overall mortgage market,” he said.
“As restrictions eased in the middle of the year, we chose to increase lending in our core buy-to-let and residential businesses at higher pricing, albeit with reduced maximum loan to values (LTVs) and loan size.
“We remained vigilant regarding market uncertainty and managed our risk appetite accordingly to maintain strong credit quality. However, I am pleased that new business volumes have now recovered to near pre-Covid levels in these sub-segments, with a strong pipeline of new business.”
OSB sales restructure includes senior departures
Field-based business development managers (BDMs), a new intermediary sales development department, and the specialist finance team will report into group sales director Adrian Moloney.
Meanwhile, the corporate account team, which manages the relationship with mortgage clubs and mortgage networks, will report into group distribution director Roger Morris.
As a result, two long-serving specialist distribution managers, James Briggs and Daniel Watson, have left the lender – confirming the changes on their Linkedin pages.
Briggs had been with the lender for seven years most recently in the bridging finance and second charge arena, while Watson had served four years with the specialist lender.
When asked by Specialist Lending Solutions the lender did not give any details on the change to the size of the team, how many people had left the business or if there would be any further changes as the lenders come together.
They follow former head of sales Jamie Pritchard who confirmed his exit last month, having won the head of sales title at the British Specialist Lending Awards 2020 in October.
Following the restructure, it said heads of intermediary sales development, specialist finance, corporate accounts and two national sales managers have been appointed.
Simon Cockerill has been appointed as head of intermediary sales development across all lending brands.
The role will be to develop and lead a new and enhanced telephony and web-based service that will assist field-based BDMs and enhance the contact strategy to support broker partners.
Emily Machin takes on a new role as head of specialist finance, leading the sales teams covering bridging, second charge and commercial lending for Precise Mortgages and InterBay Commercial.
Liza Campion has taken the position of head of corporate accounts for all lending brands and is responsible for all senior relationships with mortgage club and mortgage network partners.
James Forth and Alan Kimber will take up wider national sales manager roles overseeing the BDM teams for Precise Mortgages and Kent Reliance for Intermediaries respectively.
Writing on LinkedIn, Briggs said: “I’ve had a great seven years, learned a lot and worked with some fantastic people and businesses.
“I’m very grateful to Alan Cleary, Roger Morris, Jamie Pritchard and Adrian Moloney for their support, along with all the other great people I’ve worked with.
“I look forward to a fresh challenge in the New Year, in the meantime I wish all my contacts a healthy and happy New Year.”
Watson also thanked Morris, Pritchard and Moloney after his four year there.
“During this time, I have had the opportunity to work with some fantastic brokers and specialist distributors while expanding my knowledge across the whole specialist market including, buy to let, residential and bridging,” he said.
“It’s been a pleasure working at Precise with some amazing people, in particular the sales team that was formed over my four years.
He added: “I am excited about the next chapter in my career in 2021.”
Commenting on the restructure, group managing director for mortgages Alan Cleary congratulated Cockerill, Machin, Campion, Forth and Kimber on their new roles.
“Through these internal appointments, we’ve captured the experience and knowledge of our best people and utilised their skills to further strengthen our aspiration of becoming a bigger, better and stronger specialist lender,” he said.
“With regards to the people that have exited the business, I wish them all the best for the future.
“Intermediaries have always been fundamental to the success of the group and pivotal in providing borrowers with sound advice, especially during such a challenging time in the mortgage market.”
He added that the changes reinforced its continued commitment to the intermediary market and corporate accounts.
InterBay relaunches commercial mortgage offering
Earlier this month the lender also reintroduced its semi-commercial product range after it withdrew from both markets earlier this year as the pandemic hit.
The new commercial product range has rates starting from 5.74 per cent with two, three or five-year fixed terms and goes up to a maximum 65 per cent loan to value (LTV).
Loans are available between £150,000 and £1.4m for properties up to £2m in value, however the lender noted that it will consider larger loans or property values if requested.
It added that brokers with a proposal are encouraged to speak to their local business development manager for guidance and to help tailor their application.
OneSavings Bank group sales director Adrian Moloney said: “InterBay Commercial are back to doing what they do best, offering their intermediary partners a range of commercial, semi-commercial and buy-to-let propositions, fully supported by an award winning business development team.”
InterBay launches semi-commercial mortgages
Under the range, commercial income can be considered alongside residential income, with loan to values (LTV) up to 70 per cent.
Rates start from 4.79 per cent for a two-year fixed rate at 60 per cent LTV.
Minimum loan size is £150,000 and interest-only or owner-occupier are also considered.
Adrian Moloney, group sales director at OneSavings Bank (pictured), said: “This is an exciting range for InterBay Commercial and something I know our broker partners have been asking for.
“It was really important that we followed a structured approach to ensure we could fulfil market requirements and be transparent on the parameters around which we can confidently do business.
“Let’s be clear, these are still testing times, however with the experience and knowledge that InterBay Commercial brings to its intermediary broker partners, we’re absolutely confident that now is the right time to bring this semi-commercial offering to the market,” he added.
Interbay relaunches large HMO and MUFB range
Properties of up to 20 bedrooms or units can be considered for purchase or remortgage with a maximum loan size of £1.5m up to 70 per cent loan to value (LTV).
Larger loans will be considered on a referral basis and intermediaries should contact their senior business development manager to discuss specific cases.
The lender, which is part of One Savings Bank (OSB) said it will be utilising long form valuations as part of the process.
OSB group sales director Adrian Moloney said Interbay had experience in the larger HMO and MUFB market.
“This enhanced range illustrates our commitment to the market as well as the confidence we have in our policies by being able to offer long form valuations,” he said.