As the mortgage market continues to operate, albeit in a constantly changing environment, we address some of the common questions landlords are currently faced with.
How have lenders reacted in the current COVID-19 climate?
Lenders have adjusted their risk appetite due to the uncertainty around valuations and landlords claiming mortgage payment holidays as their tenants have experienced difficulty in paying the rent due. As valuers are not able to carry out physical valuations, lenders are relying on Automated Valuation Models (“AVMs”) or desktop valuations. Given such limitations lenders are managing their risk by restricting Loan to Values (“LTVs”). Some specialist Buy to Let lenders, whose access to funding from the capital markets relies on physical valuations, have temporarily withdrawn from the market.
Are lenders offering 75% loan to value buy to let mortgages?
Yes they are. Simple residential units where an AVM or desktop valuation can be done are proceeding. For mortgage applications on properties which require a physical valuation, these are being processed up to valuation stage and put on hold until a valuer is able to visit the property.
Is there a difference between a new BTL mortgage and refinancing an existing BTL mortgage?
For existing landlords there is no difference. Lenders will assess their existing portfolio to ensure these are self-financing and that they are not currently facing financial difficulty due to Covid-19.
Will taking a mortgage payment holiday affect my chances of getting a BTL mortgage?
Look at your cash flow closely and do not request a mortgage payment holiday unnecessarily. Lenders are keen to support BTL borrowers whose tenants are facing financial difficulty paying their rents. If you want to apply for a new BTL mortgage whilst taking a payment holiday, a lender may be less inclined to lend as a payment holiday may be seen as a signal that your property portfolio is already financially strained.
My property is currently empty and I cannot get a new tenant due to the current social distancing restrictions. How will this affect my ability to re-finance?
Most lenders will want to ensure the property is tenanted as they rely on the passing rent to assess affordability. There are some lenders who can take a more holistic view on affordability and if you can demonstrate that you can afford the mortgage payments without rental receipts there are still options available to re-finance.
Is it easy to contact lenders to make an application?
Whilst lenders are keen to assist landlords with their financing requirements, they are experiencing significant pressure on their staff resources. As such, more lenders are relying on and working more closely with external mortgage advisers who can prepare all the information required for the mortgage approval process. A carefully prepared mortgage application could increase a landlord’s chances of getting the financing they need.
The above information is our understanding of the position as at 5th May 2020. Both the government and lenders are introducing changes on a regular basis.
Get in touch
We hope you’ve found this Q & A of some help. If you are currently looking to finance a new acquisition or to refinance your existing mortgage(s), or would just like to discuss your personal position and current options, please contact the Kinnison team at:
e: [email protected]
t: +44 (0)20 3871 2823