2.39% Buy to Let Mortgage Rates!

2.39% Buy to Let Mortgage Rates!

19:57 PM, 9th October 2014, About 7 years ago 18

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When I first heard that The Mortgage Works were offering a 2.39% buy to let mortgage rates I thought to myself; “yeah, yeah, yeah … here we go again … more headline rates for brokers to hook in more newbies” Buy to Let Mortgage Rates

Sure enough it comes with a 2.5% arrangement fee, it’s restricted to 60% LTV and the revisionary rate is whatever TMW decide they want it to be, because it’s not a tracker mortgage product.

At first I thought ….

Buy to Let Mortgage Rates

Who in their right mind would fall for that!

But then … in a flash … a brainstorm … or more a mind fart perhaps … something occurred to me!

If LTV’s are 65% or lower, TMW will allow second charges 😀

Now this means that a further 20% LTV layer of equity finance could be applied, thus taking the LTV to 80%.

For a speculator who wants to get in and out of a deal in a couple of years, but milk the cashflow to death in the meantime, this could be just what they have been looking for.

Same goes for anybody wanting to maximise their cashflow for a couple of years before selling up, hopefully at a profit.

Yes you’d give up 40% of any capital appreciation over that two year period to the equity financier if you sell up or refinance in two years time, but if there isn’t any capital growth the cost of the deal is less than 2.5% a year for 80% funding (plus fees of course!)

Now actually that’s not bad ……

It could also enable you to do two identical deals at 80% gearing as opposed to one at 60% gearing. That would mean that you get 60% of any capital growth, which multiplied over two deals provides 20% more than just doing one deal. On top on that you can also double up any rental profits.

And remember, there’s no monthly payments whatsoever on equity finance – great for cashflow!

Want to learn more?

Well it’s going to cost you £200, but for that we will introduce you to our recommended Equity Finance brokers and also provide you with a spreadsheet we’ve produced to help you to analyse the viability of equity finance for yourself.

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by Mark Alexander

11:05 AM, 11th October 2014, About 7 years ago

Reply to the comment left by "Mandy Thomson" at "11/10/2014 - 10:57":

Hi Mandy

I will double check that for you and try to get to the bottom of the official policy.. My information is based on hearsay from brokers who have been placing this business. It is, of course, entirely possible that TMW's underwriters are given a certain amount of discretion on a case by case basis.

Either way, it would not change the points I'm making in this particular article because the maximum LTV for the 2.39% product is 60% anyway.

by Mandy Thomson

11:17 AM, 11th October 2014, About 7 years ago

Thanks, Mark.

by Ian Ringrose

11:19 AM, 11th October 2014, About 7 years ago

Is the LTV looked at just on the given property, or all properties that the landlord has with TMW?

by Mandy Thomson

11:26 AM, 11th October 2014, About 7 years ago

Reply to the comment left by "Ian Ringrose" at "11/10/2014 - 11:19":

Hi Ian

A good question, but the article by Julia Rampen that I've linked to talks about a given individual property, and that's always been my understanding of how the policy works.

by Mark Alexander

11:38 AM, 11th October 2014, About 7 years ago

Reply to the comment left by "Ian Ringrose" at "11/10/2014 - 11:19":

I agree with Mandy, it's a great question.

I strongly suspect that underwriters discretion will be applied.

One applicant may have three £100k loans with TMW and 65% LTV averaged across the three. Another applicant may have a few million of loans arranged pre-credit-crunch and have an average LTV across his of 100% due to property valkues having fallen in his area. The larger loans will undoubtedly have been sanctioned by a credit committee in the first place so any new lending would have to be referred back to credit committee too.

Sorry to keep repeating the same phrase Ian but I think this is another scenario where "horses for courses" will apply.

It would be unreasonable for any borrower to expect a lender like TMW not to want to take a "commercial view" on various scenario's affecting their risk. Accordingly, their criteria can only be expected to be formula based up to a point and thereafter, that's why credit committee based underwriting is necessary.

by Mandy Thomson

12:03 PM, 11th October 2014, About 7 years ago

Reply to the comment left by "Mark Alexander" at "11/10/2014 - 11:38":

I've heard (only anecdotal evidence mind) that TMW are very much of the "computer says no" mentality. However, it's reasonable to assume that where high worth customers with good crediting rating are concerned it might be somewhat different, but from what I've heard, not so sure...

by Howard Reuben CeMap CeRER

16:16 PM, 11th October 2014, About 7 years ago

No need to get hung up on TMW as they not the only lender out there! Yes, they are an excellent lender and have great rates but there are several lenders who allow a second charge, including Platform, Mortgage Trust, Shawbrook Bank etc etc. Several lenders will allow equity loans as a 2nd charge, up to a total 85% LTV. When BTL equity lending was first launched it was an unknown and innovative product, but now looking at how much business has been transacted on this basis and how well they have performed with the underlying lenders, this is now a mainstream option that can only go from strength to strength as time goes by.

As always, if any investor would like to take advantage of any 'creative' mortgage deals, the first port of call should be to discuss their personal and financial situation (taking in to consideration portfolio size and exposure etc) with a professional Broker who has comprehensive access to the market.

by Mark Alexander

13:10 PM, 13th October 2014, About 7 years ago

Reply to the comment left by "Mandy Thomson" at "11/10/2014 - 12:03":

That may be the case where a broker who places an occasional case with them once in a blue moon is concerned. However, they do obviously take very good care of their key introducers as well as their established clients.

For run of the mill transactions there will obviously be more automation to keep costs down. However, do not under-estimate the value of relationships (fantastic, awful or non-existent) between brokers and underwriters 😉

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