The UK property market attracts all manner of buyers and investors. This high variety of applicants often means that brokers regularly face difficulties when looking for fulfil their client’s buy-to-let mortgages or bridging loan needs.
But how can we resolve this?
By uncovering the struggles facing the broker community, we can then highlight how bespoke finance can be adapted and deliver specialist financial solutions for brokers situated across England and Wales.
1) Difficulties with first-time landlords
A recent poll found that over half of brokers (55%) regularly encounter difficulties when sourcing a financial solution for a first-time landlord. Adverse credit also poses a problem for 50% of brokers. When it comes to first-time buyers, brokers may find it difficult to find lenders willing to provide the finance. This is often due to lender confidence, as the client is viewed as inexperienced. Lenders don’t want the risk of, for example, a first-time landlord who is looking to invest in an HMO (House in Multiple Occupation). Those that will accept these applicants generally require a high deposit or offer less attractive rates.
Source: The Intermediary
2) Difficulties with foreign national landlords
Another common issue for brokers is trying to find a buy-to-let mortgage or fast finance needs when representing foreign national clients. For similar reasons to first time landlords, lenders will often require extra information to proceed with a deal. This information can include the length and type of the client’s visa, as well as the length of time the client has spent in the UK. When facing a tight deadline, this additional information from traditional lenders or high street banks could put their clients deal at risk of falling into default or lose their investment property and their deposit.
In these situations, bridging finance is a viable way to secure your client’s property. You can find out more about our overseas bridging loans here; specifically tailored for offshore investors.
Source: Online Mortgage Adviser
3) Difficulties with existing landlords
However, in truth, some brokers will also face complications when placing what, on paper, would seem to be a more straightforward application. For example, finding a new loan for a landlord expanding their portfolio. Indeed, affordability and income are key obstacles within an application for some lenders, while others will not consider second charge loans.
For brokers whose clients do not meet strict criteria, they will often see their cases fall through. Even if cases are accepted, landlords with affordability issues or poor income projections might struggle to access the widest range of financial solutions. In fact, 30% of brokers cite affordability issues and income calculations as reasons for deals falling through.
Finally, Energy Performance Certificates (EPC) can also pose difficulties for brokers. If a property is below the required EPC rating to rent out a property, many lenders will be wary of providing the landlords with a mortgage. One in five (20%) brokers say they have faced issues with EPCs when brokering deals.
If you have a client who needs to improve their property’s energy efficiency, check out our top 5 refurbishment ideas for buy-to-let properties.
Placing deals for commercial clients
Whilst commercial properties are back on the rise, there are many lenders who are still shy when it comes to lending against these assets. Therefore, brokers who are looking for commercial lenders may need to look more towards specialist finance. A bridge loan, for example, can be tailored to suit your clients individual needs.
Experience is again an area of concern for many lenders. This is partially true for those who adhere to a strict tick-box approach. Much like the issues facing first-time landlords, brokers may struggle to find a traditional lender for their client. This may include clients who are:
- Purchasing an unusual property
- Looking to convert a commercial property into residential assets
- Facing complex circumstances
For more information of commercial bridging loans, you read our MFS top 5 uses for commercial finance here.
How MFS can help overcome complex scenarios
Clearly, a lack of flexibility from lenders is an issue for brokers. If their lending criteria is too rigid or a lender is unwilling to take on more complicated cases, a broker can be left struggling to find the best products for their clients. We take a ‘can do’ approach to lending for all our products. This includes loans for first-time landlords, commercial loans and loans for overseas investors.
With over 15 years of experience as a specialist lender, we are uniquely placed to resolve problems for brokers and offer loans to their clients. Our bespoke range of innovative bridging loans and buy to let mortgages allow us to help brokers in a variety of circumstances. Regardless of their complexity or uniqueness. For complex deals, for example, brokers need a lender that can support them with fast and flexible financial products. As specialist in the complex, you can trust that MFS will be on hand to support you and your clients’ needs:
- Our BDMs on hand to answer any questions you may have – meet the sales team here
- We underwrite from day one to ensure we face any potential issues head on
In short, we can offer financial solutions to brokers that other lenders might shy away from.
To find out more about how MFS can support brokers with their client’s buy-to-let purchases, contact us today.