Most January, the secured loan marketplace sees a significant spike in applications.
The usual reasons apply:
Christmas and New Year Festivities and excesses have been lumped onto a flexible friend, but the flexible friend needs repaying at month end, and is a little less flexible than advertised on their interest rate!
The HMRC tax bills are rolling in with the returns and businesses have perhaps overstretched and exhausted their tax fund on expansion plans.
Family have visited over Christmas and the cramped conditions in the 3 bedroom semi detached house mean an extension is desirable.
As usual we package all of these applications with skill and speed, getting your customers what they want (sometimes funding as quickly as 24 hours after application), whilst remunerating our introducers quickly, giving their businesses a much needed cash injection in Q1 of the year.
This January we have educated our brokers on the PRA changes to Buy To Let affordability calculations and this has fostered a rush for brokers to get out to their property investor clients and have frank discussions about their borrowing and investment plans for 2017. Essentially the changes, a reaction to George Osbornes bonfire of the property tax breaks, mean that PRA regulated lenders must stress the first mortgage, second mortgage and take into account the tax banding of the individual (invariably higher rate), then apply a circa 145% - 155% rent to debt ratio.
In short this has made placing capital raising enquiries on BTL securities very difficult. However, it is business as usual for the non PRA regulated companies for the time-being.
I say for the time-being, because the FCA has informed these lenders that they would like them to abandon their non stress tested, 120% rent to debt ratio, in favour of the PRA model. To date, this polite request has been rejected, which gives mortgage brokers a small window of time to take advantage of favourable affordability models, before the door is firmly shut.
If your landlord clients traditionally use their investments in order to raise capital, now is the time to contact them, and refer them to Intelligent Loans for a quick, professional, service.