Octane ‘Productless’ BTL mortgage range criteria updateMake Text Bigger
Octane Capital is now offering its Buy to Let lending with a no “off the shelf” product facility.
Instead of a range of prices based on Loan to Value and criteria Octane Capital will base the cost of the mortgage on the perceived risk the borrower represents to the lender.
They will lend to individual landlords and companies with a minimum criteria of rental income covering 100% of the mortgage interest pay rate as opposed to the traditional 125% and under the latest PRA rules 145%. Minimum property value will be set at £100,000.
Criteria and product summary:
- Max LTV 70%
- 2% arrangement fee
- Stress tested at 100% of pay rate
- The ‘Buy to Let’ loan is in the style of a pseudo, long term bridging loan with a maximum term of 3 years, interest rate is either 6.99% or 7.99% (dependent on the deal) although 2% of this can be deferred until paid off at redemption, so 100% of pay rate could mean 100% x 4.99%.
- Borrower pays lenders legal fees and also the val fees too
Although it is only for a maximum 3 year term it could be considered as a mortgage with an initial deal period, but with the necessity for an exit strategy after that term.
The MD of Octane Capital, Mark Posniak, has said that he does not require a computer to tell if a potential borrower is a good risk or not and will consider all a customers circumstance not just if they have missed one mobile phone bill payment.
The Chief Executive and founder, Jonathan Samuels, said; “Loan to Value clearly has a role to play for any lender, including ourselves, during the assessment of risk, but in our industry we believe there is a huge over reliance on it that can work against lenders and borrowers alike.
“Charging someone X percentage if they have a 30% deposit and Y percentage if they provide a 40% deposit is often misguided as the borrower with the smaller deposit can be less of a risk once you drill down into the detail.
“As a result, we’ve decided to launch without a set product sheet with a list of rates based on Loan to Value.
“Instead, each loan will be priced according to its level of risk. This new blank canvas approach has left some people scratching their heads, but for us it’s a far more sensible way to offer loans.”
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