Sourcing systems can’t handle B2L

It is becoming increasingly difficult for mortgage advisers to keep on top of the buy-to-let market, with new lenders venturing into the sector, constant rate and criteria changes, incentives such as free valuation and free legals and even 100% rental calculations. How can advisers find the best products for their clients?

Sourcing systems claim to offer a solution. Since regulation, there has been a huge increase in the number of advisers using these systems. Some networks and clubs are so impressed with them that they insist their members use white label versions to source all their cases.

The process seems easy but does it work for buy-to-let? No.

These systems have not been enhanced enough to provide an accurate search for buy-to-let mortgages. The fields which have to be completed to generate a search are aimed at residential mort- gages and are often inappropriate for buy-to-let.

Using sourcing systems to find what other companies are offering is a task that TBMC carries out on a weekly basis. It has recently become apparent that the lack of design behind the sourcing of buy-to-let mortgages is having a detrimental effect on the lists of rates arrived at.

For example, take the affordability details that are required by some of the sourcing systems. For residential mortgages it is essential to know these details to work out the maximum borrowing figure. For buy-to-let, the amount an applicant can borrow is derived from the rental income and the client’s income and outgoings have little impact.

Does this have an effect on the final source? Yes. Changing the figures in the income and outgoings means a different final list of rates. This is further affected by the number of years’ income put in.

One sourcing system asks if the property is a main residence, a home for dependants, a holiday home or a second home. A buy-to-let property is none of the above. Yet changing the option will result in a different set of rates being generated. If the correct option for the case is not available, how can anyone source the full list of rates they require?

The list of inappropriate questions goes on. Even changing something as small as the number of additional properties an applicant has can alter the list.

Test this next time you are in your sourcing system. The effects have to be seen to be believed and it is essential that brokers who are using these systems are aware of the pitfalls.

From our experience it is impossible to say that you can source the most appropriate buy-to-let mortgages in this way. In fact, I could go as far as to say that by using such a system you are likely to miss the best rate available for your client.