How to help your portfolio landlord clients
Keep on top of this changing sector to ensure you can find the best deal for your clients
Sarah Green Director of Intermediary Sales, Virgin Money
The PRA rules on lending to portfolio landlords introduced last year mean getting a buy-to-let mortgage may be more challenging for some of your clients. But it is still possible and you are well positioned to help portfolio landlords navigate the new lending landscape and get a great deal.
Here’s how you can help them: 1 FIND THEM First, make a list of your landlord clients with four or more mortgaged buy-to-let properties and contact them for a review. This is important because even if they have read about new lending rules for portfolio landlords (and many won’t have done), they may not consider themselves a portfolio landlord with just four mortgaged buy-to-let properties. Even those who know they are impacted may still need support. 2 BE CLEAR If your clients don’t know about the rule change, explain it to them, but keep it simple. Lenders now need a separate approach to underwriting for portfolio landlords that looks at their wider finances, but more important is what that practically means for them. Do they need to fill out a simple form detailing their properties or will they have to produce a lot more evidence and documentation to get a mortgage? The answer of course depends on which lender they apply to and some require more information than others. At Virgin Money we recently started lending to portfolio landlords and we worked hard to design a process that is as straightforward and streamlined as possible. We’ve created simple templates so that it’s easy for both you and your client to provide us with all of the correct information from the off. This includes their business plan, cashflow and details of their properties. We’ve also partnered with eTech to enable brokers to upload details of their client’s portfolio in seconds, saving precious time and keeping our turnaround times down. 3 KEEP UP WITH CHANGES Make sure you are up to date with the different lending options for portfolio landlords and who does what. Not all lenders offer mortgages to portfolio landlords and those who do have different products and policies. For example, Virgin Money will lend to landlords with up to ten mortgaged buy-to-let properties, with up to five being held with us. Every lender has their own policy on this and you need to work out which best suits your individual client.
4 TAKE CARE OVER TAX ADVICE By all means tell your portfolio clients about the option of limited company structures to hold or buy further buy-to-let properties, but tread carefully. Ensure you signpost them to tax advice and explain that there are benefits and drawbacks to limited company buy-to-let. As their intermediary, it’s important to highlight the fact it can offer tax efficiencies but can also carry significant costs and will not be the best option for all landlord clients. The same goes if they are considering selling a property. This could improve their overall LTV position and portfolio performance, plus it could release funds to pay down their other mortgage debts. But remind them of the potential Capital Gains Tax implications of selling. 5 WHAT ABOUT SERVICE? There can be a big difference in turnaround times between lenders, with reports of application to offer times of up to a month on portfolio landlord cases from some lenders as they get used to the new processes. At Virgin Money we took our time to develop a proposition that enables us to honour our ten-day service promise on portfolio landlord applications* as well as the rest of our mortgage lending. And we will pay out £100 if we miss that deadline. Obviously if you have a client that needs a mortgage fast this is a key consideration and worth checking with lenders before submitting a time sensitive case.
HELP AT HAND If you have any questions on our approach to portfolio lending, we are here to help. Visit our dedicated portfolio lending webpage or speak to your BDM.
*10-day service promise starts from receipt of a fully packaged case
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