The Mortgage Works backs down as the balance of risk has shifted again and The Mortgage Works (TMW) are now committed, once more, to supporting property investors who accept tenants in receipt of housing benefit.
Some may say that TMW (owned by Nationwide, which is owned by its members) has a duty to protect the interests of its members and therefore if Landlords are defaulting on their mortgage payments when they have tenants on benefits then the Nationwide will potentially lose money – and of course this shouldn’t be allowed to continue.
However, after recently announcing that they are changing their criteria to stop buy to let investors letting their properties to tenants in receipt of benefits, there was an immediate and angry outcry from the Private Rental Sector. TMW has listened to their borrowers and have done a complete U-Turn on this criteria issue.
Richard Napier, the group’s mortgage director, has now said that the group had changed its mind, following concerns raised by customers. “The clarification of the terms and conditions, which took place last December, brought The Mortgage Works into line with several other Buy-to-Let lenders,” he said. “This will now be removed.”
Great news – and a huge sigh of relief- for Landlords across the UK who have TMW mortgages and tenants on benefit.
There has been plenty said about the rights, wrongs, risks and morality on this subject, but one underlying issue is that the TMW mortgage holder also has a responsibility to their own business model to make sure that such ‘business interruption’ does not mean profit interruption. Loss of rent, evicting tenants, sourcing and signing up new tenants – all cost money (profit).
Change in the market with products, tenants, lenders and even the economic climate, is always going to happen.
The old worrying adage of ‘all your eggs in one basket’, comes to mind in this issue with many borrowers now realising that the way forward is by spreading their mortgages across a range of lenders which in turn spreads their business risk, and consequently reduces and minimises the risk of loss should any one lender pull the plug or change criteria mid-term. We won’t get started again on the Bank Of Ireland fiasco in this article
So now we’re left with the welcome announcement that TMW have withdrawn the threat of heavy and onerous stipulations re tenants on housing benefit (great news) and, secondly that this has given many people the wake up call to look at their BTL mortgage portfolio with a eye to reduced-risk and exposure to one lender.
If you are concerned please feel free to download our Property Portfolio Review spread sheet and we have arranged for our recommended financial advisers to offer you a free one to one review of your financial position at the same time.