BM Solutions BuytoLet rates reduced

by Neil Patterson

13:43 PM, 29th August 2012
About 7 years ago

BM Solutions BuytoLet rates reduced

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BM Solutions BuytoLet rates reduced

BM Solutions BuytoLet rates have been reduced across their five and 3 year fixed rate range in line with other lenders reductions and a decrease in LIBOR.

There are also minor adjustments in the cost of some tracker rate products, but it is the cost of longer term fixed rate BuytoLets that reflect more accurately the direction the market is taking and its revised expectations for future inflation and cost of borrowing figures. BM solutions have always been a significant barometer of the industry due to their substantial market share. Product details showing the decrease in cost over the product term are:

4.79% Five year fixed until 30/11/2017 max 75% LTV with a 3% Product fee:

Reverts to Bank of England Base rate (currently 0.5%) plus 4.34% for the life of the loan. Product is exclusively available when taking out BM conveyancing.

Early repayment charges 5% of the amount repaid until 30/11/2013, 4% until 30/11/14 and 3% until 30/11/2017.

This product is stress tested at 125% of the pay rate and allows you to borrow 200.41 times the monthly rental income.

Total cost over 5 years on a £100,00 interest only mortgage = £27,668.50

Previous equivalent product was 5.04% with a total cost over 5 years on £100,000 interest only mortgage = £28,956.00

4.54% Three year fixed until 30/11/2015 max 75% LTV with a 1.5% Product fee:

Reverts to Bank of England Base rate (currently 0.5%) plus 4.34% for the life of the loan. Product is exclusively available when taking out BM conveyancing.

Early repayment charges 3% of the amount repaid until 30/11/2015.

This product is stress tested at 125% of the pay rate and allows you to borrow 211.45 times the monthly rental income.

Total cost over 3 years on a £100,00 interest only mortgage = £15,324.30

Previous equivalent product was 4.95% with a total cost over 3 years on £100,000 interest only mortgage = £16,572.75

Standard criteria:

  • Minimum income requirement £25,000
  • HMOs the property must be let on a single AST with a maximum of 5 parties
  • Maximum number of 3 properties allowed with borrowing from the Lloyds Group
  • Min Loan £25,001 max £1,000,000
  • Min property value of £40,000
  • Student lets, holiday lets and tenants claiming housing benefit, rent rebate or rent allowance are not acceptable.
  • Not available to First Time Buyers.
  • Applications involving Finder’s Fees are not acceptable. A Finder’s Fee is a fee or commission paid by a seller to a third party (such as an investment club) for finding or introducing a buyer. It does not include the normal fee or commission payable to any estate agent handling the sale.

These products may not have the lowest headline rates, but you need to factor in the cost of the arrangement fees over the term of the initial product rate. A cheaper product over a shorter period of time may necessitate all the fees involved with remortgaging on a more frequent basis and hence represent worse value for money.

The most significant change to the standard criteria for BM solutions since the credit crunch has been their reduction of the total number of loans an individual can have with them and across the Lloyds group to only three. Thus decreasing the potential exposure to risk on each client, but in my opinion also ruling out many experienced Landlords who could represent better quality and risk profiles.

To discuss a specific Buy to Let deal you can call us on 01603 489118 or email info@property118.com

If you would like to add your own requirements and search for the most popular available Buy to Let products please click here



Comments

Gillian Schifreen

22:12 PM, 29th August 2012
About 7 years ago

These new deals looked very good for me until I saw the exclusion, 'tenants claiming housing benefits' I have a wonderful single mum tenant on benefits. Surely in the current economic climate her income is more reliable than those employed in the private sector. Surely this type of exclusion should be banned, would they get away with saying no black or gay tenants? Of course not!

Mark Alexander

22:12 PM, 29th August 2012
About 7 years ago

I totally agree Gillian, in my opinion it is totally wrong for lenders to tell us who we can and can't rent our properties to. I'm sure they hide behind reasons such as they are harder to insure etc. but so what? Can I put it into my tenancy agreement that "if you decide to attend full time education as a student, or you lose your job and claim housing benefit, rent rebate or rent allowance you must vacate immediately as that's the rules set by my lender"? Actually, yes I suppose I could add that to my tenancy agreement but I'm absolutely certain it wouldn't be enforceable. This begs the question, if lenders put these conditions into their mortgage criteria and terms and conditions of mortgage lending would a court grant possession on the grounds that the terms of the mortgage had been broken? It would be very interesting to know whether such a case had ever been taken to court and what the outcome was wouldn't it?

20:21 PM, 30th August 2012
About 7 years ago

It does mean the lender will not take into account the fact that a LHS rent may be more than a “normal” rent when doing the valuation. So it does discount areas when the only option is to rent to LHS as no one want to live there.
Even if a court would never grant possession for breaking these terms, you may get black listed if they found out you were breaking them and it very hard to every get another mortgage.

23:31 PM, 1st September 2012
About 7 years ago

Our view would be that any exclusion on Housing Benefits tenants is entirely unenforceable since The Private Tenacies Order in Northern Ireland and indeed general equality laws would not allow this. In particular, it is entirely open for a tenant to apply for Housing Benefit at any point in the tenancy, and a landlord could not end a tenancy on the grounds that a tenant claims Housing Benefit. Actually, we have already notified Birmingham Midshires on a number of occasions that their buy to let conditions for NI are seriously out of date and therefore unenforceable but no one seems interested!

Mark Alexander

11:33 AM, 2nd September 2012
About 7 years ago

Are you suggesting that all landlords in the British Isles can ignore this piece of lending criteria and lenders can do nothing about it?

13:00 PM, 2nd September 2012
About 7 years ago

I think the issue here is a lender makes a business decision to lende on a certain criteria.
If that criteria is changed they wold be ithin their rights to call in the loan.
A bit like someone using a residential loan for tenants either accidentially or deliberately.
Using a similar analogy a bank could cancel a credit facility of bank account if it became aware of commercial activity as opposed to consumer use only.
Not easy for a bank to find out but they are entitled to make business decisions to withdraw product6s and ther is NOTHING byou can do about it.
They don't even have to give any reasons.
It has happened to me on several occasions.
Now I know hy they have closed accounts but they won'y admit it.
They do it all under the guise of it being a businessw decision of their's.
There is no fundamental human right to be availed credit by any regulated institution in the UK.
Foreclosure is a risk that every person who has any credit in any form whatsoever faces.
If BM Solutions found out that a tenant was paying £1 in LHA monthly in addition to the rent that would be enough for the bank to foreclose.
Morally and probably financially stupid; but they can do it.
I would imagine though it would not do their PR any good; but banks as we are seeing are behaving in more bizarre ways.
LL with large positively cash flowing properties are being bankrupted as the lender WON'T refinance unless massive equity injection is made.
Banks are not behaving rationally and will continue in this fashion as long as they receive massive free QE from the Govt.


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