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Here’s how buy-to-let landlords can still get a mortgage

The buy-to-let mortgage market had been booming before coronavirus hit, with hundreds of products available at competitive rates. But it’s still possible to secure a good deal.

Many mortgage lenders decided to restrict their product offering as uncertainty surrounding coronavirus took hold in March. However, a number of banks and building societies have already begun to relaunch certain products, and the outlook for landlords seeking buy-to-let mortgages has already improved.

More than 85% of buy-to-let mortgage lenders are now continuing to lend to landlords, according to mortgage broker Mortgages for Business. In numbers, just seven of the 49 buy-to-let lenders operating in March have now stopped lending. This leaves 42 still to choose from.

HSBC in particular has made headlines after retracting all of its buy-to-let products temporarily. Others that have closed their doors to landlords include Foundation Home Loans, Together Money, Vida Home Loans, Platform Home Loans, State Bank of India and Furness Building Society.

Plenty of choice for landlords

For some lenders, it was just a case of temporarily reorganising their operations in light of the lockdown, before getting things back on track.

Steve Olejnik, managing director of Mortgages for Business, said: “Four of the lenders that initially withdrew their BTL mortgages – Santander, Clydesdale, Precise Mortgages, and Kent Reliance – are now lending again.

“There is no need for landlords to panic! Yes, landlords looking to remortgage have fewer options. But they still have plenty.”

He also adds that different lenders are derisking against different kinds of borrowers. They are removing some product ranges and tightening some lending criteria. This means that, while landlords won’t have a full range of choice, there should still be options out there.

What’s still on offer

Mortgages for Business has set out a list of how many lenders are still operating for the various types of landlords. For example, for HMOs, 15 out of 27 lenders are still offering products (-44%). For first-time landlords, borrowers can use 35 out of 47 lenders (-26%). Portfolio landlords have a choice of 33 out of 40 operators (-18%), while limited company landlords can select from 24 out of 30 lenders (-20%).

“A good broker will be able to find you a competitive deal because those deals are still out there, for now,” said Olejnik. “My advice to landlords looking to remortgage is act sooner, rather than later.”

“You may have to answer a few more questions when you’re applying for a remortgage that you would have had to last month – but a broker will still be able to find you a deal. That’s how to get through this.”

Desktop valuations are possible

One of the major issues presented by the current UK lockdown is mortgage valuations. This is why many lenders are choosing to only deal with low-risk customers.

However, many lenders are offering desktop valuations as an alternative to a physical inspection. The likes of Shawbrook, Paragon and The Mortgage Lender can all conduct automated valuations. Many more lenders are also expected to join the ranks to remain competitive.

There will be certain restrictions in place for these types of valuations. For example, loan to values tend to need to be lower (such as up to 75%). For higher loan to values, some lenders are still processing remortgage applications and scheduling valuations as the last step.

Keeping landlords in business

The Mortgage Lender launched desktop valuations for buy-to-let purchase and remortgage just this week. Where possible, it will also have options for expat and limited company buy-to-let applications, too.

For owners of HMOs, multi-unit blocks and other more complex properties, you can still apply and wait until a physical valuation is available.

Steve Griffiths, sales director at The Mortgage Lender, said: “Landlords’ business hasn’t stopped because of the current crisis. It is now more important than ever to ensure they have products that can deliver access to funding so they can manage their portfolios.”

“With the new purchase market effectively on hold, facilitating pipeline purchases and remortgages are key to ensuring brokers can continue to support their clients and in turn provide them with much-needed cash flow during this challenging period. We will continue to support our intermediary partners by combining our real-life criteria with the latest technology solutions.”

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