Not all landlords are professionals in the business of letting property and we see plenty of cases with buy to let type property being used as security for borrowing.
The ‘professional’ buy to let market has a large mortgage industry which has built up around it but what I am dealing with here is the single or dual property or holiday let landlord, call it BTL or HL, or the so called ‘involuntary’ landlord under CBTL.
There is a small part of the mortgage industry supporting both the holiday buy to let market and the market for single landlord purchasing or refinancing with the usual restrictions around interest coverage ratios and the borrower’s experience and past payment history. An even smaller part might consider CBTL.
There is however a significant opportunity for brokers to help these types of landlords to obtain finance, which frequently is not required for the improvement or refinancing of the let property in question, but instead to be used for business purposes or debt consolidation. Capital raising, repaying other debts such as HMRC, or as we are seeing more often of late, the refinance of expiring or expired bridging facilities.
There are some scenarios where the choices of lender can be very limited, CBTL cases of any kind and regular BTL cases where the rental income does not support the additional borrowing within the ICR% (interest coverage ratio) and in these cases a specialist BTL or CBTL second charge can be useful. The ability to bring into account other earned income and a less restrictive approach to ICR from specialist lenders can immediately open more opportunity to capital raise.
A specialist lender like Finsec will also more likely take a view regarding rental cover where the property is a mix, say in a semi commercial or part holiday use scenario and there are several or more tenancies, whether AST or lease or licence.