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Buy-to-Let Watch Episode 9 | The Extraordinary Tale of When BTL Gets Tricky

Buy-to-Let Watch Episode 9

Buy-to-let watch episode 9

Liz Syms
Liz Syms, CEO and Founder of Connect Mortgages


In the latest instalment of our Buy-to-Let Watch series, titled “Buy-to-Let Watch Episode 9 | The Extraordinary Tale of When BTL Gets Tricky,” we aim to provide our readers with the role specialised lenders play following the previous episode titled “Buy-to-Let Watch Episode 8 | Why Lenders Are Jubilant In Their Efforts.”

Securing buy-to-let (BTL) mortgages with unique challenges requires strategic approaches, and advisers can employ various tactics to assist clients in obtaining the necessary financing. Exploring opportunities with specialist lenders proves beneficial, given their flexibility in lending criteria and willingness to cater to clients facing complex financial scenarios or dealing with unconventional properties.

In instances involving limited company BTLs, extensive houses in multiple occupation (HMOs), multi-unit blocks, holiday lets, and BTLs linked to offshore entities, the expertise of a specialist lender becomes indispensable.

Buy-to-Let Watch Episode 9 | Expertise, creativity, and persistence: Successfully placing tricky BTL mortgages necessitates a comprehensive understanding of the specialist lender market. Advisers must identify lenders aligned with the unique needs of their clients. Recent cases illustrate the diverse challenges, including flats with deck access, properties situated above takeaways, a constable tenants in case of mortgage default.

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Buy-to-let watch episode 9 | Specialised Lenders: A key resource:  For scenarios requiring a nuanced approach, lenders like Unity Trust Bank specialise in considering unique lending requirements. These lenders extend their services to unconventional properties, charitable organisations, and other social-related lending needs, demonstrating their commitment to addressing diverse financial situations.

Buy-to-let watch episode 9 | Working with packagers or master brokers can help you find solutions you may not have been aware of

In a recent scenario, we encountered a unique housing arrangement comprising four tenants in shared accommodation. Not falling under the obligatory House in Multiple Occupation (HMO) category and not mandating a license from the local authority, conventional lenders like Accord or Santander could have been viable options.

However, complications arose due to the presence of internal locks on doors and individual assured shorthold tenancy agreements for each tenant—a configuration frowned upon by most mainstream lenders.

This particular case found a fitting solution through collaboration with Fleet. This packager accommodated the unconventional setup and provided standard lower Buy-to-Let (BTL) rates instead of the higher HMO rates. The expertise of packagers or master brokers can open doors to innovative financing options, presenting solutions that may have otherwise gone unnoticed.

Their ability to navigate through unique cases demonstrates the importance of exploring diverse channels for property financing, ensuring flexibility and tailored solutions to meet specific needs.

Buy-to-let watch episode 9 | Good relationships

Effective relationships are pivotal in navigating the complexities of Buy-to-Let (BTL) mortgages. Our offices boast a dedicated Fleet underwriter, a valuable asset in fostering connections with underwriters and lenders’ Business Development Managers (BDMs). This rapport proves instrumental in securing challenging BTL mortgages, as it enables advisers to grasp the nuances of criteria, the underwriting process, and the unique requirements of each lender. By doing so, advisers can strategically position their clients’ applications, enhancing the likelihood of approval.

In scenarios involving limited company BTLs or expansive House in Multiple Occupation (HMO) projects, the involvement of a specialist lender becomes imperative. The intricacies of BTL lending demand a thorough understanding of the client’s financial situation and property details. Furnishing precise and comprehensive information aids lenders in comprehending the associated risks, facilitating more informed lending decisions.

An emerging trend in the BTL landscape revolves around capital raising for property improvements. Landlords are increasingly attuned to the need for enhancing property standards, prompted by impending regulations like energy performance certificates and the government’s ‘Reforming the Private Rented Sector’ report. This heightened awareness is anticipated to drive a surge in inquiries for capital raising on BTL properties.

However, the current market poses challenges to capital raising. Elevated interest rates compound issues related to rental affordability for existing loans, let alone for additional borrowing. Navigating these challenges requires astute financial planning and a deep understanding of market dynamics, ensuring advisers can adeptly guide clients through the intricacies of capital raising in the current economic climate.

Buy-to-let watch episode 9 | Building relationships with underwriters and lenders’ BDMs can be extremely helpful:  More and more lenders are launching income-based BTL or top-slicing options, which could assist. However, a BTL second charge could be an option if the landlord wants to raise capital on a property locked into an existing fixed rate.

Buy-to-let watch episode 9 | Second charge

When it comes to second charges in the buy-to-let (BTL) sector, the landscape is distinct, with fewer lenders considering BTL compared to residential second charges. Notable players in this arena, such as Central Trust, Together, and West One, stand out for their flexible criteria, and some go the extra mile by providing income-based solutions to enhance affordability.

Traditionally, securing and registering a second-charge loan has been a complex process, often requiring consent from the first-charge lender. Unfortunately, issues arise when existing lenders impose restrictions, either denying or limiting consent, especially in cases with minimal overall borrowing against the property.

However, certain second-charge lenders offer an alternative approach by utilising an ‘equitable charge’ as a different form of security. The advantage here is that it doesn’t necessitate consent from the first-charge lender, providing landlords with a broader spectrum of options.

The scenarios we’ve encountered include challenges with properties like flats featuring deck access and those situated above takeaway establishments. Such unique cases underscore the need for a nuanced understanding of second charges in the BTL realm.

For those unfamiliar with second charges or facing intricate BTL scenarios, collaborating with packagers or master brokers becomes invaluable. These professionals can unveil solutions that might have eluded awareness, offering a strategic approach to navigating complex lending landscapes.

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Successfully manoeuvring through tricky BTL mortgages demands a blend of expertise, creativity, and persistence. Proactive engagement, cultivating relationships, and tapping into a network of industry professionals empower advisers to guide their clients effectively, ensuring they secure the necessary financing to realise their investment objectives.

We reached the end of our publication on “Buy-to-Let Watch Episode 9 | The Extraordinary Tale of When BTL Gets Tricky”; until next time, stay Connect!


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