Mortgages & Finance

This is great news .

Confidence must be returning as this is just like the good ol days

I was an 80% man and then discovered 85%

with 60K you can buy 3 x 100K units rather than just 2

So one of those  property`s rental  profits  and also its CG is in effect for free

Just like the supermarkets  3 for the price of 2 deals

The magic of leverage

Quite the contrary this is very risky lending to gain market share.Rumbles of 2007

There is a risk yes  as with all lending . This risk has been reduced though since 2007

My last mortgage was over 6 years ago now so I`m out of touch so Adam will know more

We now have  PRA though

Much more DD on the applicant themselves enforced on the lenders by Gov

So not every tom dick or harriett gets 85% in the way they may have done previously

Its like Border control x 10 to get a mortgage these days anyway

Rent multipliers up to 150% though gives the lenders a 50% safety net

A 15% price crash is possible but on a 100K unit 15K is still  a decent safety net

Even if you do get to zero equity for a few years your business is still viable over 20 years with the rental income

I would be happy to have 100% LTV for myself and indeed have in the past

Banks will potentially loan 50K to a random start up with just a business plan and little or no collateral

So 85% against physical  bricks and mortar with an quantifiable income is perhaps less risky in many ways

Ref your sentence """Banks will potentially loan 50K to a random start up with just a business plan and little or no collateral"""

In reality Banks will not lend a single penny to a random start up, if not with Director/Shareholder PG and fully collateralise (with "quality" collateral, i.e. cash, first charge on property etc).

Yes you are right .. As I wrote that I thought i was being rather too loose with my words

The magic of leverage indeed.

I would not say "Confidence" is high if we consider rents not rising with RPI, london house prices stagnating (or falling) and the B word. I'd suggest confidence is in Limbo.

My thoughts come to competition, their are a lot of lenders fighting for the prime vanilla buy-to-let business. This means challenger lenders often loosen criteria in the fringes to win business.
Why we see more lenders entering LTD Co and HMO spaces and of-course higher LTVs like this.

The supply of finance being high is certainly Good News for Landlord

@Don Fump - It's certainly higher risk for the lender. They are gambling house prices wont fall by 15% in order to have there security safe. Though its not as "high risk" on the borrower as previously. Given the new PRA Rules on rental stress tests (no guarantee) rents should cover the mortgage payments. In addition all three lenders offering 85% LTV require the landlord to have prior experience (No First Time Landlord 85% LTV). They all also require some income to cover and stress test background portfolio.

High LTV mortgages returning?

Now I know the crash is on it's way.

Here we go again risky lending again

it might help The northern landlords who are close to negative equity since the 2007 crash

if it was via ltd co it would help me with my landlord shuffle

as the years move on

Hmm? You can get 85% LTV in a LTD Co to do the Landlord Incorporation Shuffle.

Whilst its a great product for those that need it, I wouldn't worry too much about risky lending.
The PRA stress tests make it hard to reach 85% LTV so the rents achieved have to be very strong. They also check background portfolio stress tests and don't lend to First Time Landlords.

If we consider First Time Buyers in Residential can buy at 95% LTV. Landlords at a good 10% LTV lower would not be of great concern. As we remember other banking reforms, requiring higher capitalisation at banks.

The one I’m looking at has a value of 75k and a rent of £450 pcm