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  • Buy-to-Let

    PRA will make S24 look like walk in the park



    Section 24 still appears to be the focus for many landlords, however PRA is coming in a few weeks and I think will cause far more problems for landlords with four or more properties than S24.

    It is likely that landlords will have problems re-mortgaging and may find that they will be stuck on SVR or have to place all their mortgages with one lender - those with MEX mortgages will know cross charges can make redeeming one mortgage difficult. 

    Lenders are also likely to introduce higher application fees to cover underwriting costs.

    Details are only just starting to be reported in the news.

    http://www.dailymail.co.uk/money/buytole...html 

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    Great thread title ELL!

    I agree that the PRA will make things far more challenging.

    Some of the issues have been discussed here:

    Understanding the impact of PRA on landlords

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    I don't think the majority of landlords are appreciating how difficult mortgaging and re-mortgaging is likely to become.

    If somebody has got say 5, 15, 25 or 50 properties and wants a new mortgage or re-mortgage the lender is going to have to underwrite all the landlord’s other mortgages against their criteria.  This must give the lender an incentive to want those other mortgages switched to them as well

    The amount of information that will be needed for each property for a single mortgage application.

    The amount of time it is going to take brokers and lenders to process a mortgage application and the cost of this.

    If any lender has already produced a submission check list it would be useful to see this so landlords can have an idea of the impact that PRA will have.

    My view is that the number of lenders that will offer mortgages to portfolio landlords will reduce rapidly, interest rates and up-front costs will increase, lenders will expect other mortgages to be switched to them and will cross charge the mortgages.  Landlords may get stuck on lenders’ SVRs if part of their portfolio is under performing.

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    Essex

    I reckon you are likely to be correct

    Lenders will he looking to lend to those with 3 properties or less.

    For those LL with more than that they should expect as you suggest a higher fee structure.

    It could well be that because one part of the portfolio doesn't meet lender requirements no remortgage may go ahead.

    LL will have to dispose of those properties that don't meet the remortgage lender's criteria.

    These PRA regulations are really going to compromise many LL.

    Such LL will have to stick with existing lenders.

    This could be unviable.

    Perhaps the PRA will start to affect existing LL far quicker than S24.

    This may well result in LL having to bail.

    I didn't realise that the PRA regs could be so pernicious.

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    PRA? I see what it is now, maybe when it is first used in a post it could be in full?

    Does this just affect future borrowing?

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    Its another nail in the coffin

    some BTL projects with small yields will struggle to get a remortgage

    the result is if a Landlord wants to pull money out to fund a new project they will find it hard

    the days of easy money are finished

    to move forward you will need a lot of cash on the hip

    BTL has become a rich persons business and even if you are rich will invest by a company and pay a lot of tax one way or another


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    Learn Change and Adapt ?????


    Agreed. My biggest worry recently has been PRA, as I'm very concerned about my remortgages, which I'll need to do at the end of fixed terms to lessen S24 effects.

    I have brilliant tenants on expensive rents, and I'm not going to put their rents up. Yet. But fixed rates end in a couple of years, and I think I may be in a tricky position. Have been meaning to speak to my broker, but I think I'll stick it out for a bit.

    PRA is the white elephant that, combined with S24, and lack of social housing stock,  will create an absolute shit storm for the government.

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    Rachel 

    "Change is a prerequisite to longterm survival".

    The establishment is rigged so that the rich stay very rich, and the poor get poorer.

    Hi, looking at the link Vanessa posted, it looks like you can remortgage without the new PRA rules being taken into consideration, unless your looking to remortgage to a higher amount.:

    "Excluding those re-mortgaging (and not increasing borrowing) from the supervisory statement, in a similar way to residential lending. "

    So releasing more cash will become harder, but hopfully we wont get trapped on higher SVR rates.

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    This is correct. PRA cannot be used to create "mortgage prisoners".  I recently used an on-line mortgage switcher to change to a lower fixed rate from a lender's SVR with no problem whatsoever.

    See - Mortgage switch - how much could YOU save?

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    I think a logical assessment of what may happen, although I would expect the properties to come to market over a period of time as lenders’ introductory rates come to an end and landlords look round for a re-mortgage or landlords looking to add to their portfolio and submit a new mortgage application.

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