Foundation: More business opportunities to be had in BTL
Whilst mortgage advisers deal with the bulk of buy-to-let business there is still a considerable amount of lending being placed directly with lenders, recent research by Foundation Home Loans has revealed.
The latest landlord research for Q3 showed that 73% of landlords carried out their most recent mortgage via an adviser and 19% went direct to a lender.
Jeff Knight (pictured) director of marketing at Foundation Home Loans, said: “In the increasingly complex and competitive world of buy-to-let mortgage lending, it seems somewhat surprising to hear that nearly 20% of landlords went direct to a lender for their latest mortgage, and 23% plan to go direct when they next remortgage.
“However comfortable you are with the market – and there are many portfolio landlords who might feel able to sort their own finances out – there is still the potential to miss out on a quality deal with benefits that only a mortgage adviser would be able to access, but as a landlord going direct you would not.
“That should surely be the message that advisers – and the wider industry – need to take to landlord borrowers because things do change very quickly, rates and criteria are shifting on a daily basis, and a landlord that thinks they’ve got the right mortgage for them, might actually be very far way from that outcome by not using an adviser.
“Once again, we collectively need to extol the value of quality advice, not just in a one-off transaction but across a borrower’s whole portfolio, because there are clearly huge benefits for portfolio landlords to take advice and to secure a much better financial position because of this.”
Nearly a third (31%) of landlords said they plan to remortgage at least one of their properties over the next 12 months.
Some 65% of those said they would expect to use an adviser and 23% would go direct to a lender.
Most landlords (48%) had followed a recommendation when choosing their adviser whilst 11% chose an adviser through an internet search and 9% chose through their membership of a landlord body.
HMOs continue to generate the highest rental yield for landlords at 6.5%, with 20% of landlords now having an HMO property within their portfolio.
Knight added: “It’s perhaps less surprising to see more landlords opting to put HMOs and multi-unit blocks within their portfolio, especially as the necessity of securing strong rental yield from properties has never been greater.
“As a lender active in the HMO space, we know how different they can be to other types of properties, and with last year’s licensing rules now in full effect it’s important that advisers are able to impart these types of details so the landlord knows their full responsibilities.
“We often have a situation where the criteria, income and mortgage requirements are different for HMO lending, and therefore advisers who want to be at the top of their game in this space should work with like-minded lenders, and ensure they are able to get the best deals for their HMO landlord clients.”