Precise Mortgages relaunches top slicing for buy to let
The feature is available across the lender’s entire buy–to–let range including individual, limited company, portfolio and homes in multiple occupancy (HMO) products.
It is not available to first-time buyers and applicants who are receiving furlough income or Self-Employment Income Support Scheme (SEISS) payments.
A calculator is also available to help brokers identify how much surplus portfolio or earned income is required to achieve a requested loan size in the case of a shortfall.
Rental income must meet a minimum of 110 per cent interest cover ratio (ICR) of the pay rate of a product for the property to be eligible. Surplus income can then be used to prove the borrower can make up any shortfall against the standard ICR.
Customers can switch to top slicing after they have applied for a mortgage without resubmitting, in case further options are needed due to down valuations.
Adrian Moloney, group sales director at Precise Mortgages, said: “The relaunch of our popular top slicing feature demonstrates how committed we are to supporting the market and our broker partners.
“Top slicing allows landlords greater choice in the way they manage their properties and could help them to optimise their investment opportunities. We’re reintroducing a wider choice of products by unlocking access to our two-year fixed rate, as well as our five-year fixed rate mortgage products.
“These products could be particularly useful for those who may have been restricted from investment opportunities, as well as helping landlords achieve greater flexibility around loan size.”
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.
Precise reintroduces refurbishment mortgages
The product involves bridging loan before exiting on to a buy-to-let mortgage, which does not need to be repaid while the refurbishment works are being completed.
Precise said it is designed to help landlords maximise rental yields by refurbishing a property before renting it out, as well as allowing them to take value from the property to reinvest elsewhere.
Landlords can borrow up to 65 per cent LTV on the bridge and 75 per cent of the post-works valuation on the exit buy-to-let mortgage.
The lender added that one application form will produce two offers, one for the bridge and one for the buy to let, as well as two procuration fees.
OneSavings Bank group sales director Adrian Moloney said the relaunch demonstrated its commitment to supporting the market.
“Landlords have traditionally faced difficulty in securing finance to refurbish a property before letting it out,” he said.
“Refurbishment Buy to Let enables them to do so by bringing together the flexibility of bridging finance together with the surety of an exit onto a long-term buy to let once the improvement work has been completed, provided the property meets the expected valuation following refurbishment.”
Precise adds limited edition BTL deals and reintroduces credit impaired range
For its limited edition specials, the lender has reduced fees on its tier one range to 1.25 per cent.
Rates start at 3.14 per cent and are available at up to 70 per cent loan to value – with limited company and personal ownership structures accepted.
Landlords with small and large portfolios can apply and the loans can be used for purchases and remortgages, including houses in multiple occupation (HMO), multi-unit blocks and flats up to 20 storeys high.
Impaired credit landlords
Meanwhile, the lender’s tier two range for landlords that have less than perfect credit profiles has returned.
Precise will accept applicants with credit histories that include defaults and county court judgement (CCJs) if they are registered over 24 months ago.
Products are available at up to 75 per cent LTV, with two-year fixed rates from 3.24 per cent and five-year fixes starting at 3.59 per cent.
It includes HMOs, limited companies and landlords with small or large portfolios.
Precise increases bridging LTV and loan sizes
The lender has increased LTVs to 65 per cent and maximum loan sizes to £1m.
The range includes standard and light refurbishment products on an expanded variety of property types with rates starting from 0.49 per cent per month.
OneSavings Bank group sales director Adrian Moloney (pictured) said: “In the current climate it’s essential that brokers can continue to help as many of their customers as possible.”
Crystal Specialist Finance managing director Jo Breeden added: “It’s great that Precise Mortgages has increased LTVs to 65 per cent.”
“This is a nod to the further confidence investors, brokers and lenders have in bridging as a viable solution for both the regulated and non-regulated market.”
Saffron BS re-enters BTL and Precise cuts rates – round-up
This relaunch includes two expat products; a five-year fix at 75 per cent loan to value (LTV) with a rate of 4.27 per cent and a two-year discount buy to let mortgage priced at 3.99 per cent at 75 per cent LTV with a £1,995 fee.
The domestic buy-to-let product is a five-year fix at 75 per cent LTV priced at 3.67 per cent.
Tony Hall, interim head of mortgage sales at Saffron Building Society, said: “We are so pleased to re-enter the buy-to-let market again after a brief break. It has been a big priority for us to get these products back to market so that borrowers can take advantage of the stamp duty holiday which is due to terminate at the end of March.
“The business development manager team at Saffron are pleased to start accepting new applications from 23 September.”
Precise Mortgages has reduced rates on its buy-to-let mortgages by up to 0.4 per cent and launched help to buy remortgage products.
Rates on its buy-to-let range are now 3.14 per cent for a two-year fixed and 3.49 per cent for a five-year fixed available to individual and limited company borrowers.
For HMOs and limited company HMOs, the two-year fix is priced at 3.44 per cent and the five-year equivalent is 3.74 per cent.
All these products are available up to 75 per cent LTV.
The Help to Buy remortgage products are available to borrowers with impaired credit profiles. There is no product fee and Precise offers a valuation fee refund.
These remortgage deals are available up to 75 per cent LTV and include a two-year fixed at 4.24 per cent and a five-year fixed at 4.34 per cent.
Adrian Moloney, OneSavings Bank group sales director, said: “It’s vital that we support the market in these challenging times, and we believe these rate reductions across our range of buy-to-let mortgages will help brokers in placing more of their customers’ cases.
“As one of the first specialist lenders to enter the Help to Buy market, we remain as committed to the scheme as we always have been, and our new Help to Buy remortgage products will help more first-time buyers meet their aspirations of becoming established homeowners.”
NatWest, Nationwide, TMW and Precise resume Scotland cases as valuations restart
Valuers will be able to resume property inspections in Scotland from 29 June, having already done so this week in Wales.
Nationwide Building Society and its buy-to-let arm The Mortgage Works (TMW) said for those properties on hold, they were hoping to contact the applicant or vendor by 26 June to arrange a booking date.
This will be subject to estate agent access and availability, an initial safety assessment and customer agreement.
“For any physical valuations that were previously booked for week commencing 22 June, these will be rescheduled for week commencing 29 June,” the lender said.
“We’ll continue to accept a transcription of the single survey within the home report for up to six months post inspection, until 31 July 2020 when the normal 90-day rules will apply.”
It also asked brokers not to call as the online case tracking system would be updated and to inform it if the borrower no longer wished to proceed or there had been a material change.
NatWest and Precise
NatWest has confirmed its valuers will also be resuming work in Scotland on 29 June.
This applies to residential and buy-to-let applications, for properties where the occupier allows access and where the valuer confirms the property is safe to enter.
For properties in Scotland, NatWest said its process for transcript valuations remains unaffected and the home report must have been completed within the last 90 days to rely on a transcript.
Where a physical valuation cannot be completed the case will be placed on hold.
And in a communication to brokers, Precise Mortgages confirmed that as per the updated Covid-19 guidelines, it can now progress cases within Wales from today and in Scotland from 29 June, using physical valuations.
Landlords must beware of compliance risks for protecting tenant deposits – Cleary
You’ll also know that I’m fully behind any measure that weeds out those unscrupulous landlords and letting agents who can give the rest of the market a bad name.
It’s why I was so pleased to see it made a legal requirement on 1 April 2019 that all letting or property management agents in England who handle clients’ money must sign up to a government-backed client money protection (CMP) scheme in order to continue trading, or face up to a £30,000 penalty.
These CMP schemes are vital as they give landlords and tenants the peace of mind they will be compensated if a letting agent cannot repay their money, for example if they go into administration.
Any client money must be held in an account with a bank or building society authorised by the Financial Conduct Authority, and the agent must obtain a certificate confirming membership of a scheme which must be freely available to anyone who asks to see it.
If this was introduced back in 2019, why am I talking about it again now, more than a year after it was rolled out?
Well, agents were given a grace period of 12 months to set up a pooled account where they could hold all of their clients’ money, avoiding the need to set up hundreds, possibly thousands, of individual accounts.
However, due to the difficulties some agents are having obtaining pooled accounts, the grace period has been extended for a further 12 months, this time to 1 April 2021.
According to government figures, there were still 251 letting agencies who were struggling to find a bank which could provide them with a pooled account.
Thorough due diligence
So where does all of this leave landlords and their tenants?
It goes without saying that landlords should always undertake thorough due diligence to ensure their property agent is compliant with the regulations and signed up to one of the government-approved CMP schemes.
Furthermore, if your client is a landlord with a large number of properties, the Residential Landlords Association suggests they should spread their portfolio across a number of letting agents to ensure they’re fully covered by the scheme.
As with any scheme of this complexity, it was perhaps inevitable there were going to be teething troubles.
So while we wait for the government to iron out the flaws, landlords can ensure their clients’ money is protected by carrying out the proper checks and making sure they don’t put all of their eggs into one basket.
OSB publishes criteria for furloughed and self-employed borrowers
Precise Mortgages and Kent Reliance for Intermediaries will both accept furloughed borrowers for residential applications.
This will be at 80 per cent of income to a maximum of £2,500, along with any evidenced employer top-up above this amount.
However, for those on the Self Employed Income Support Scheme (SEIS), current income will be used for affordability purposes where evidenced.
And it will not accept bounce back loans and coronavirus business interruption loans (CBILs) as a source for a deposit.
Where buy-to-let cases are concerned, OSB is still not accepting applications with top-slicing.
Where the landlord has income that is unrelated to buy to let, and is in receipt of furlough or SEIS income, then the application can be considered.
Again, bounce back loans and CBILs are not acceptable as a source of deposit.
The lender stressed that there may be additional underwriting requirements applied to these situations and brokers should check with the lender before submitting cases.
OSB, which includes Interbay Commercial, added that all buy to let and residential pipeline cases where valuation fees have been paid, will be progressed in line with the lending policy in effect at the time of application.
This includes honouring the product the case was initially submitted on.
Again, OSB noted: “As expected in the current climate, there will be some additional underwriting checks needed, such as ensuring the client’s current circumstances are considered.
“However as long as these requirements are met, the original application will be able to progress.”
OneSavings Bank managing director Alan Cleary (pictured) said he was fully aware how important it was to a broker and their customer that when they paid a fee for a product, they had the confidence that their transaction will be honoured.
“We’re in a position that we can move forward as a group and help brokers develop their business as well as ensure they can continue to service their existing customers,” he said.
“We’ll work on cases in date order but ask that brokers please bear with us as we’re working in exceptional circumstance at reduced capacity.
“Our broker partners have my personal assurance that we’ll get to them to discuss their client’s needs and will uphold existing arrangements subject to underwriting,” he added.