BM Solutions scraps minimum income rules on buy to let mortgages

by Property118.com News Team

20:29 PM, 7th June 2013
About 6 years ago

BM Solutions scraps minimum income rules on buy to let mortgages

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BM Solutions scraps minimum income rules on buy to let mortgages

BM solutions logoBM Solutions, the leading BTL lender from the Lloyds Banking Group, has removed its minimum income requirements for all buy-to-let products in its range.

As from Monday 10th June, Birmingham Midshires will finally be joining a handful of other lenders by providing experienced property investors with BTL mortgages without the need to satisfy any minimum income levels at application.

Even though a borrower can still only have 3 mortgages across the Lloyds Banking Group brands (which includes Halifax, Lloyds TSB, C&G, BM Sols, TMB, Intelligent Finance etc.) we’re pleased to see that they have removed the minimum income required restriction, recognising that many investors are self employed and even though their accounts may show low net profits, that the rental income generated is the true indicator of affordability.

The ‘broker only’ lender has previously required a minimum income of £25,000 for all applicants but this rule has now been removed as they acknowledge that buy-to-let affordability is based on rental income, rather than personal income. This, they say, makes it more accessible to more landlords.

Your Broker will tell you the behind the scenes updated ‘fine print’ for all BM deals, including that certain provable income will still need to be supplied as part of the application process. BM has also changed its rental affordability calculation, which will now be based on 125% of the mortgage interest.

They say this is because it is the right thing to do to ensure borrowers are in the best possible position to be able to manage future payments if their circumstances change.

BM Solutions “One Minute Mortgage” process remains in place and is available to Brokers 24/7. The One Minute Mortgage provides mortgage decisions in less than one minute and allows borrowers to submit additional borrowing and multiple Buy to Let applications.

With a well tried and tested system, now coupled with ‘no minimum income’ requirements, BM Solutions are clearly hungry for more BTL business.

Changes will come into force from Monday 10 June.

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Comments

Mark Alexander

15:29 PM, 11th June 2013
About 5 years ago

Tip 4 - to work out whether you qualify for a maximum loan use our Landlords calculator >>> http://www.property118.com/

When you get to the bit about costs use the 20% option.

If the breakeven rate is 5% or more your loan fits their stress test criteria and if your credit score is good you are probably home and dry in terms of getting a decision in principle 🙂

8:55 AM, 21st June 2013
About 5 years ago

Removing minimum income requirements for all buy-to-let mortgage is really good for our Customers.

Their are some more options for self-employed applicants to get mortgage with only 1 year bank accounts statement, whereas previously they need to present 2 year Account.

Mark Alexander

9:28 AM, 21st June 2013
About 5 years ago

@Mortgage Broker - to a certain degree I agree with you. However, I think it is important that lenders do some common sense underwriting too. Poor underwriting nearly killed the mortgage industry.

My fear is that BTL products will be abused if a common sense approach is not taken to underwriting. For example, BTL loans could be used as an underhand way to buy a property to live in which the buyer can't afford. Another example is where a person can't already meet their liabilities and hopes the extra cashflow will help to make ends meet.

If I was underwriting deals and lending my own money I would want a bit more than a valuation and a decent credit score to make a decision. For example, if a person earning £5k a year was applying for a BTL mortgage I would ask question. If it turned out there partner was earning £100k a year and they had a small mortgage I would ask why the loan was in the lowest earners name. The answer would likely be tax reasons. I would then offer the loan subject to the main earner standing as guarantor. That's just one example of course but do you see where I'm going with this?

PS - I used to be an underwriter in the days when bankers had brains and not PC's 🙂

David Lawrenson

10:06 AM, 21st June 2013
About 5 years ago

Good points made by all.

I have to say the overall Lloyds strategy WRT buy to let looks odd from many angles, not least the fact that their commercial arm is very much open for buy to let business and is even on the NLA panel of suppliers and heavily touted, whereas the retail side still has this daft 3 property restriction.

It does not look a very joined up strategy to us at LettingFocus.

However, back in 2008-9, at C&G, they certainly had by far the best follow on lifetime rates at 2% over BOE base rate, albeit with a high initial fee. For those of us who were buying property and intending to let and hold for the long term, in what was a very depressed housing market, it was a god send.

Some time after they hugely hiked their rates, of course.

I imagine Lloyds are regretting offering those rates now as they are likey losing a lot of money on them.

Equally Barclays Woolwich must be regretting offering base rate trackers at 0.69% over base in back in the day.

Still, the lenders failure to price properly or underwrite effectively means happy days for us landlords.

Howard Reuben CeMap CeRER

15:28 PM, 21st June 2013
About 5 years ago

Hi David

Lloyds are not the only lender to have a commercial arm lending under one criteria, and a residential arm with restrictions under another set of criteria.

One of our favourite BTL lenders has for a long, long time been lending in Scotland under their commercial banner, and yet have only just this month launched into Scotland through their residential BTL division too.

My suggestion?...... Always use a whole of market Broker who is a Full Member of the NACFB as well, so that as a borrower, you're working with a truly independent Firm who can properly source the most suitable deal from a full market (ie commercial range as well as residential range) of products not available to 'normal' mortgage brokers.

Howard

Mark Alexander

15:56 PM, 21st June 2013
About 5 years ago

@Howard, thanks for the clarification of 'normal'.

Having been a founder of the NACFB 20+ years ago I suspect that makes me abnormal too based on your definition? LOL

Can't you tell it's Friday afternoon?!!!

Have a good weekend 🙂

Howard Reuben CeMap CeRER

16:05 PM, 21st June 2013
About 5 years ago

LOL

My thoughts were that we're either 'normal' or 'special' 🙂

Although that could be misconstrued too!

(te)

Howard Reuben CeMap CeRER

16:07 PM, 21st June 2013
About 5 years ago

(ignore that 'te' - not sure what happened there!) :S

Marell Gillespie

11:17 AM, 8th May 2014
About 5 years ago

I understood where more than 3 properties are held no additional borrowing is allowed? Not ideal for investors who have several mortgages with BM and who have now built up fair amount of equity?

Mark Alexander

11:21 AM, 8th May 2014
About 5 years ago

Reply to the comment left by "Michelle Graham" at "08/05/2014 - 11:17":

Hi Michelle

Have you heard of equity finance secured by a second charge? There are no monthly payments on the extra borrowing, just a profit share on the increased value of the house in 10 years time, or on sale if that occurs sooner.

If you're on a good rate with BM Solutions but want to raise extra money without remortgaging take a look at this >>> http://www.property118.com/equity-finance-for-buy-to-let-landlords/44713/
.

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