From 30 September 2017, new mortgage regulations from the Bank of England (BoE) will become effective. These will mean that in many cases landlords with more than three mortgaged buy-to-let properties will have to provide much more information about all their existing rented properties and other assets, liabilities, income and costs.
Currently, many lenders when underwriting buy to let mortgages focus mainly on the rental income and value of the property they are lending against.
With Phase 2 of the new BoE underwriting requirements, when considering applications from landlords with more than three buy-to-let properties all lenders will have to collect and validate details regarding all the properties that the landlord has an interest in. This will include collecting information on property values, rental income, costs and mortgages.
The BoE has asked lenders to take this approach because they want lenders to make sure that they fully understand the full financial circumstances of portfolio landlords and the impact any new lending will have on their finances.
Whilst Paragon has always asked for information on all the properties a landlord holds and on the full range of their economic activity, other lenders have not. Going forward all lenders will be expected to collect full information on a landlord’s finances at application stage. This means that some lenders will need to ask more questions and undertake greater validation than they do today.
We expect that the industry will adapt well to these new regulations but landlords should expect that the application process will become more detailed and may take longer than has previously been the case with some lenders.
Paragon has more than 20 years’ experience as a specialist buy-to-let lender and has a sharp focus on dealing with professional landlords. As a result, we are very well positioned in respect of these changes and are working hard to make sure any impact on our landlord customers is kept to a minimum.
As an out and out expert in lending to professional portfolio landlords, Paragon is well prepared to deal with Phase 2 of the PRA affordability rules. So, dealing with Paragon will be quicker, easier and more familiar, even after 30 September 2017.
If you’d like more information around the PRA affordability rules and how they will affect you, you can talk to us directly. Alternatively, the full PRA buy-to-let underwriting standards expectations can be found on the BoE website.