It has been a busy quarter for the buy-to-let space, with new lenders welcomed into the fray. We are always keen to have a thorough understanding of lending criteria to help us quickly identify where cases should be placed. If you have not had a chance to bring yourself up to speed with State Bank of India, Foundation Home Loans and soon-to-launch Axis Bank, here is a heads-up.
SBI has started with some very attractive pricing. Its terms and arrangement fees are pretty good too. The headline features are:
- Five-year fixed rates starting from 3.69 per cent
- Three-year variable rates starting from 2.89 per cent
- Arrangement fees from nil to £795 to 1 per cent
- General stress test at 120 per cent of pay rate plus 1 per cent
- Maximum loan up to £3m
- Available to SPVs and LLPs
- Multi-units up to three flats
- Maximum age of 80 years at end of mortgage term
Less attractive is the maximum LTV of 70 per cent and, if you have cases for HMOs or trading limited companies, you will have to go elsewhere to get them placed.
Customers can access the products directly. SBI has a sales presence in its branches but it is limited to London, Birmingham, Leicester and Manchester.
SBI has also entered the intermediary space. It has a small panel of brokers but its BDMs are also out and about talking to other brokers and some networks.
We recently joined the limited distribution panel of Foundation Home Loans, which launched its buy-to-let offering to 75 per cent LTV in February, with products for both prime borrowers and those with light adverse credit. The best bits are:
- Two-year fixed rate at 3.99 per cent
- Two-year discounted tracker at 3.76 per cent (Libor + 3.19 per cent)
- No maximum number of mortgaged properties in the background
- Can have up to 10 properties (max £5m) with FHL
- Max three properties in any one full postcode
- Max age 85 at end of the term
- No credit scoring
- No minimum income
- No minimum time self-employed
- It is ‘good’ with related sales and gifted deposits
- No minimum size for studios
- No background affordability checks
To fit prime products, there must be no adverse (missed mortgage payments, defaults or CCJs – unsecured borrowing is ignored) in the past two years. With the light adverse range, borrowers can have one CCJ or default (max £2k) or one missed payment in the past two years (but clean in the past six months). FHL is not suitable for limited company or expat borrowers and is a no-go for flats less than two years old, HMOs, let-to-buy, flats above commercial and flats above six storeys.
Axis Bank will position itself in the specialist space and products will be available via intermediaries only. We expect these great terms:
- No minimum income
- Unlimited number of mortgaged properties with other lenders
- Maximum loan size of £1m
- Lending to limited companies and expat landlords
- HMOs will be acceptable security
We dedicate our best buys to the new kids on the block, plus relatively new player and P2P lender Landbay.