Lending process and cost of multiple buy-to-let
02-03-2014
Completion fees for multiple buy-to-let deals are in the region of 1.5 per cent to 1.75 per cent.
By Emma Ann Hughes
The process the lender goes through depends on the client’s property investment experience, the client’s overall financial profile and the quality and location of the properties being offered as security.
Most lenders will want details of other borrowing, Ray Boulger, senior technical manager for John Charcol, points out.
Unlike some of the mainstream lenders who require a minimum income, but will not always want to evidence this particularly if the landlord is classed as an experienced landlord, Christine Newell, partnership manager of Paradigm Mortgage Services, says a portfolio approach would always be underwritten on a ‘full status’ basis.
This means the lender will require full supporting documentation for proof of income. Other than this, Ms Newell says the application process is basically the same as a normal standard buy-to-let purchase.
Brad Fordham, managing director of Santander for Intermediaries, says his company assesses each mortgage using a standard application process, which looks at the individual application, taking into account overall affordability, for example rental income and outgoings with a £1,495 fee for each property.
As a mainstream lender, Mr Fordham says Santander considers buy-to-let property applications on their individual merits, from landlords who will have:
A) A maximum of seven buy-to-let properties on completion of the new mortgage;
B) A maximum of five buy-to-let properties mortgaged with Santander on completion of the new mortgage;
C) A minimum of one and a maximum of 10 secured credit commitments at the time of application.
In addition, Mr Fordham says at least one applicant must be employed earning a minimum basic gross salary of £50,000 a year, where an applicant will have five or more buy-to-let properties on completion or five or more secured credit commitments at application.
Where an applicant has four or less buy-to-let properties on completion or four or less secured credit commitments at application, Mr Fordham says the criteria remains the same with at least one applicant in employment earning a minimum basic gross salary of £25,000 a year.
When it comes to fees, Paradigm’s Ms Newell says charges for multiple buy-to-let deals would be comparable to those charged in much of the general buy-to-let market and indeed the terms from many of the main clearing banks.
She says completion fees for multiple buy-to-let deals are in the region of 1.5 per cent to 1.75 per cent.
However with multiple buy-to-let deals Ms Newell points out the lender’s legal fees would generally have to be paid and there would be no incentives such as free valuations.
Steve Olejnik, sales director of Sevenoaks-based broker Mortgages for Business, says fees are normally a percentage of the borrowing and at the moment range from 1 per cent to 3 per cent.
If the application is from a limited company, however, Mr Olejnik says the fees and rates charged by lenders are usually a little bit more than the price an individual investor is asked to pay.
He says: “Part of that is to do with the more work that is involved and part of it is to do with the fact some lenders have to set aside more capital for what they consider to be a commercial entity rather than an individual.”