50 new buy to let products from the Paragon Group

by Property118.com News Team

21:22 PM, 5th January 2012
About 9 years ago

50 new buy to let products from the Paragon Group

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50 new buy to let products from the Paragon Group

Landlord mortgage lender has changed borrowing criteria and released 50 new loan products – although most are just variations on fixed rates and terms.

The main changes to interest buy to let landlords are revised rent and income criteria that bring more purchase and remortgage deals in to the scope of loans Paragon underwriters can consider.

Most of the revamped products and application criteria relate to Paragon mortgages – but six are for subsidiary The Mortgage Trust.

Managing director John Heron said: “The new mix of products has been created to enable intermediaries to offer their landlord clients a flexible and open approach when looking for a buy-to-let mortgage.

“I would encourage intermediaries not to shy away from approaching us if they receive a more complex or unusual request from a professional landlord as we have extensive knowledge of how they operate, the type of funding they require and specific expertise in dealing with complex buy-to-let property purchases. 

“One of Paragon’s key advantages is its ability to use its experience to look through the detail at the fundamentals of risk, and exercise a good degree of flexibility around non-core aspects of a proposal.”

Paragon also predicts tenant demand for buy to let homes will increase over the next 12 months and landlords will want to buy more properties to cater for the extra business.

The specialist landlord mortgage lender has changed borrowing criteria and released 50 new loan products – although most are just variations on fixed rates and terms.

The main changes to interest buy to let landlords are revised rent and income criteria that bring more purchase and remortgage deals in to the scope of loans Paragon underwriters can consider.

Most of the revamped products and application criteria relate to Paragon mortgages – but six are for subsidiary The Mortgage Trust.

The new qualifying criteria are:

  • Rental income calculations down from 130% cover at 7% interest only to 125% at a rate of 5%. The change is for buy to let only. House in multiple occupation (HMO) lending remains at 130% charged at 7%.
  • The Mortgage Trust minimum income level of £40,000 is removed, while the Paragon minimum income stays at £20,000 a year

The firm also claims landlords will find an improved application process to make buy to let borrowing easier.

 

Comments

10:44 AM, 6th January 2012
About 9 years ago

How long till this company goes bust again?  None of their money is derived from savings but borrowed off the international money markets which will go in turmoil  when Greece defaults in 2012.  Money costs will go through the roof then crippling Paragon.

Mark Alexander

10:55 AM, 6th January 2012
About 9 years ago

Did they ever go bust? If so please provide details. So far as I know Paragon are the only buy to let lender who continued to make profits through the recession. They've not had any government support either. My understanding is that their loans are 100% match funded, which means that they carry none of the risk for the loans they've made, securitised and continue to administer. They stopped lending for a few years at the beginning of the credit crunch when the availability of warehousing funding and securitisation became virtually impossible to fund to maintain their new business lending model but that's obviously been sorted now and their profits are rocketing. I think you are barking up the wrong tree on this one sir.

22:01 PM, 6th January 2012
About 9 years ago

Mark does Paragon know something that we all don't about EU regulation of BTL mortgages.
It would be intertesting to obtain a view from Paragon as to their take on EU proposed regulation of BTL mortgages.
They are a major industry player.
Their appreciation and understanding of the circumstances would be of great interest to us all and a bit of a coup for your site.
As you have a relationship with the the top man; perhaps you could 'persuade' him to give the Paragon perspective!?

18:09 PM, 7th January 2012
About 9 years ago

Why is buy to let so expensive ? a default doesn't seem any more likely than a PPR mortgagee. Does anyone have any figures on default rates in the buy to let sector ?

Mark Alexander

23:39 PM, 7th January 2012
About 9 years ago

We get a lot of our statistics like this for News articles via the CML website - please see 
http://www.cml.org.uk/cml/statistics

As for price, it's very much down to supply and demand. Whilst competition for new BTL lending is stronger than it was two years ago it is  nowhere near what it was it 2008, I'd suggest around 80% less products now than there were then.  Also, lenders are paying more for their funding and are passing those costs on to landlords.

matchmade

10:33 AM, 10th January 2012
About 9 years ago

The Nov 2011 stats show the rates of repossession for BTL are exactly the same as for owner-occupiers, at 0.08%.

The number of BTL mortgages more than three months in arrears was 1.45%. The number of owner-occupier arrears is, irritatingly, measured differently - by percentage of the loan rather than by the number of months: "the total number of mortgages with arrears of 2.5% or more of the outstanding balance fell to 161,600 (1.44% of all loans)". So without doing some more digging it's hard to say if landlords are more or less prone to be in arrears.

I suspect BTL lenders charge much more in interest and fees to landlords because, well, they can. As Mark says, there's insufficient competition and the profit margins appear to be generous compared with the risk. Imagine the Daily Mail headline if banks charged 5% above base to new homebuyers with a 30-40% deposit. Conventional buyers with large deposits can get a fixed loan at around 3% for five years at the moment, which is terrific for them. Meanwhile landlords with the same level of deposit are paying 5-6% variable, which will leave them completely exposed when interest rates rise.


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