Contrary to popular belief within the broker community there are funders that will lend on portfolios, and to what are termed as ‘Professional Landlords'(income derived from property ownership only).
With the re-launch of Paragon this week, there is appetite for this kind of business but it’s fair to say it’s not as voracious as it once was. Paragon products will allow you to borrow up to 75% up to 500k and then tiered to 70% up to 1,000k and then 65% up to 2,000k. Needless to say, a decent sized portfolio in London would quite quickly reach the limits imposed and in addition they have only currently secured £200m worth of funding initially, so we expect funds to go quite quickly.
What Are The Lender’s Concerns?
The biggest problem is lenders want to stay clear of these people because of their inherent fear of income being concentrated, and also exposure to an area which is so reliant on the housing market to continue to perform.
Therefore as the professional landlord has no PAYE income (unlike his part time counterpart who could be a Solicitor or an Accountant with a portfolio of 5 rental properties) lenders shy away. However I would take the view that if somebody has been managing properties successfully for the last few years, especially the last 2 or 3, and have managed to avoid getting themselves into trouble, then it is unlikely that they will see a more difficult period to negotiate.
With rental demand increasing over the last 3 months and rental asking prices starting to increase, we are certainly asking lenders to look at this under-funded area of business again.
What Can Enness Private Clients Offer?
Fortunately we do have non-‘High Street’ solution and the criteria and rates are set out as follows
Max LTV of 65%
Rental cover of 140% based on a nominal rate of 5%
6-12 months mortgage payments retained in a locked account (this money can be raised from equity when transferring)
Rental income mandated to the account running alongside the mortgage
With rates starting from as little as 2.8% over 3 month LIBOR (currently 0.84% – so overall pay rate of 3.64%) it certainly beats anything on the high street and also starts to look competitive against the SVR’s of Mortgage Express and Mortgage Trust.
If you are looking for a large mortgage, then contact Enness Private Clients, the large mortgage loans specialists.