Post pandemic, there is likely to be an increase of borrowers that high street banks will be unable to serve as their borrowing needs have become more complex.
This presents a huge opportunity for the specialist lending market to step in and support the UK’s 2.7 million landlords.
Specialist lending has sometimes been thought of as a last resort, something the buy-to-let team here at West One are passionate about changing.
One of the biggest myths is that specialist finance is complicated, while the cases themselves may be complex the process isn’t.
A specialist lender will have the resources to do the necessary checks while looking at each case individually in order to propose a transparent solution that is easy to understand.
Like many high street lenders, specialist lenders have a professional and streamlined process allowing them to deliver a quick answer to the borrower.
Aside from adverse credit, there are a number of other reasons why a specialist lender may be right solution for the borrower.
The type of property that the buyer is looking to borrow on can affect a high street lenders decision.
Properties above or next to a commercial unit may be considered high risk as the lender may worry that the property will either fail to deliver the expected rental price or to be consistently rented out, or that it will have limited re-saleability on the open market.
Homes of Multiple Occupancy (HMO), student lets, and multi-unit blocks can also be considered no-goes for high street banks, while a specialist lender will have products specifically for these types of properties.
There are a number of red flags for high street lenders when it comes to the profile of the borrower:
The age of the borrower is typically capped at 70, whereas a specialist lender will consider applicants beyond this limit. West One, for example, have an age at entry up to 80 and a term of up to 25 years can be considered.
Ex-pats often struggle to find a high street lender that will offer them a buy-to-let mortgage, West One can consider ex-pats where we take a personal approach to underwriting and look at the circumstances of the individual.
Many high street lenders have to undertake a different approach to underwriting a landlord with more than 4 properties taking personal affordability of the portfolio into account, which means that professional landlords will need to look to a specialist lender if they wish to grow their portfolio.
The purpose of the buy-to-let property can also impact a high street banks decision to lend, many high street lenders will not consider applications for holiday lets, Airbnb properties or long-term corporate lets, whereas a specialist lender will have products specifically for these uses.
While most high street lenders will make an automated decision using the client's credit score, a specialist lender will have more products available for borrowers with impaired credit.
At West One, we do not credit score, instead, our underwriting is based on a credit assessment and each case is assessed individually on its merits.
Unsurprisingly, self-employed individuals find the high street approach to self-employed hard, with many lenders requiring 2 years of accounts so that they can see a stable income and assess the level of risk.
This approach doesn’t consider the changing landscape of a self-employed business. A specialist lender will take the time to understand the individuals’ circumstances, taking a view on 1 years trading or the latest years accounts.
And for those whose self-employment is being a professional landlord whose sole source of income is their property portfolio, we at West One Can assist these clients and accept this type of income.
High Street lenders have increasingly moved to a more automated solution, while this works perfectly for low risk and low loan to value loans, it cuts out the human interaction and can result in cases with a degree of complexity falling out.
A specialist lender that undertakes manual underwriting will be better placed to offer a solution for a variety of cases. At West One, our expert team of underwriters assess each case on its own merit, doing so quickly and efficiently.
Many mortgage lenders typically require a minimum income of £25,000 for prospective buy-to-let borrowers.
Some specialist lenders may require less by way of minimum income and will decide based on the income being enough to cover their personal expenditure. However, at West One, we have no minimum income requirement.
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