Important PRA changes to BTL lending from 30th September
2:39 PM, 7th August 2017, 9 years ago
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The following is another 90 second video produced by our friends at Shawbrook Bank to explain how BTL mortgage underwriting will change from September this year.
Is it a good thing that mortgage lenders are being forced to lend more prudently or do you see it another way?
Please discuss.
15 comments on this article
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A different perspective could help you spot an issue, avoid a mistake or find a better way forward. Read the comments and add your own views if you wish.
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Fresh start with £150k what would you do?
Member Since January 2011 - Comments: 12259 - Articles: 1481
2:41 PM, 7th August 2017, About 9 years ago
I think the new rules are logical and overdue.
It will cause a problem for some borrowers but only if they took massive risks when borrowing historically and haven’t been able to increase rents since then.
Member Since July 2015 - Comments: 344
8:11 AM, 8th August 2017, About 9 years ago
I agree. If you have low LTVs and high rental coverage, you are fine.
But if you are facing a challenge with s24 and this would be revealed by looking across the portfolio, then things will be far more difficult come the Autumn.
Member Since January 2011 - Comments: 12259 - Articles: 1481
8:22 AM, 8th August 2017, About 9 years ago
Reply to the comment left by H B at 08/08/2017 – 08:11They will indeed and that’s why so many landlords are consulting us in regards to optimising their tax position and considering alternative structures in which to operate their businesses
Member Since June 2014 - Comments: 1573
9:27 AM, 8th August 2017, About 9 years ago
From re mortgaging recently, it seems many brokers and lenders are already implementing this.
A very good thing from my perspective.
What the doomsters miss about this and Basel 3 was that they help stabilise and strengthen the market, not crash it.
Member Since February 2016 - Comments: 39
10:01 AM, 8th August 2017, About 9 years ago
Reply to the comment left by Mark Alexander at 07/08/2017 – 14:41It’s already happening. I have just had a request from Paragon Mortgages for a lot more information than originally required. They have asked for a full business plan going into detail of where properties are, type, tenant profiles, my experience etc, and a full cash flow projection for the next 12 months. For me no issue as I run a tight ship. I will put off the amateurs…
Member Since June 2014 - Comments: 1573
10:11 AM, 8th August 2017, About 9 years ago
Reply to the comment left by Trevor Cooper at 08/08/2017 – 10:01Paragon business plan requirements here;
http://www.paragon-mortgages.co.uk/file_source/Files/PML16/pdf/General%20docs/Info%20and%20supporting%20documents/Business%20plan.pdf
Member Since September 2016 - Comments: 2533 - Articles: 73
2:02 PM, 8th August 2017, About 9 years ago
Reply to the comment left by Monty Bodkin at 08/08/2017 – 10:11Looks okay.
Only wasn’t sure what this meant:
‘• rent-to-costs financial model utilised’
Member Since April 2014 - Comments: 460 - Articles: 1
11:26 AM, 9th August 2017, About 9 years ago
So the Lenders want business plans – but according to The Treasury we aren’t running a business, we’re investors!:)
Member Since September 2016 - Comments: 2533 - Articles: 73
11:52 AM, 9th August 2017, About 9 years ago
Reply to the comment left by Annie Landlord at 09/08/2017 – 11:26I know. Its pathetic.
Member Since February 2016 - Comments: 39
12:07 PM, 9th August 2017, About 9 years ago
Reply to the comment left by Dr Rosalind Beck at 08/08/2017 – 14:02‘rent-to-costs financial model utilised’ – Yes I have to admit I could not work this one out. It was a good exercise creating the business plan though, and I recommend it to others. It made me question / re-think a few points