With the constant change in the economy and legislation in the Private Rental Sector on a rollercoaster of its own, here at Lofti, we want to help make at the least the world of mortgage advice, straightforward for buy to let landlords.
What we will cover
We won’t bother with the basics as landlords are more than familiar with the mortgage advice process. However, in the last few weeks, there has been a change in the way lenders look at buy-to-lets when it comes to stress tests and the types of products available on the market. Whilst mortgage advice is at the heart of what Lofti offers to landlords, the importance of insurance and a Plan B is often overlooked, so we have made sure to add our 2 cents on why it’s worth your time.
Why even bother to get mortgage advice?
Could you change your own toilet seat? Can you change your own lightbulb? You can do a lot yourself, but quickly you end up realising the time and effort involved in doing so does not always make it worthwhile, especially when you are trying to run a property portfolio, which is actually a business when you think about it, and lenders will certainly look at it like that.
Mortgage advice from a dedicated buy-to-let expert means you get the support and guidance to remortgage with ease and with minimal fuss.
What are the risks of not getting mortgage advice?
It’s all on you, calling lenders, doing the paperwork, being on hold for hours on end, not having access to all the lenders and many more risks of going it alone.
Lenders like Birmingham Midshires will only deal with brokers direct which means as a consumer, you don’t get access to some of the big players as most buy-to-let lenders to prefer to work with regulated intermediaries that are versed on their criteria and are familiar with the processes set out to conduct any mortgage applications or activities involving the lender, such a product switches.
Other reasons to get mortgage advice?
At Lofti, we understand the value of great mortgage advice, it means our community of Landlords can focus on tasks that add value, such as finding great deals to invest in, working closely with contractors to manage and improve their stock and actually spending some time away from property enjoying life – which is a rarity for most, who focus day and night on providing the best service and properties to tenants.
We do the heavy lifting and we don’t charge you a penny as the lenders will pay us for the work we do for them – a win-win situation!
To top things off, as well as expert mortgage advice, Lofti has created a documents hub meaning Landlords who remortgage using the free service get access to free online documents repository where they can store all their property information, including all the compliance certificates such as your EPC and EICRs with handy little reminders available to you, so you know when its time to get things renewed!
When should you contact a mortgage broker?
Like anything in life, the earlier you start, the easier things tend to be and the chances of success are higher.
Lofti encourages its community of landlords to start the ball rolling 6 months before their mortgage deal ends. Using the Lofti documents Hub, you can set reminders so you don’t run the risk of forgetting and then rushing last minute before your mortgage lapses onto the higher standard variable rate.
Starting the mortgage advice process this early allows you enough time to review everything with the team at Lofti, this includes things like EPC certificates, reviewing your credit report and making sure you have key documents earmarked and ready for when they need to be presented to the lender – a biggie here is your accounts which lenders like to see to confirm you have your tax affairs in order.
Starting nice and early allows you to take things at a slower and less rushed pace making the experience somewhat enjoyable. Yes, that’s right, Lofti believes that you can enjoy a more relaxed mortgage experience if you start early and plan ahead.
Oh, and despite all the gloom and doom, Property Industry Eye reports that- The property world has not come to an end, despite what the papers say.
Finding a mortgage broker?
Getting access to mortgage advice in the digital age should be easier than finding tenants for your property! There are well over 40,000 advisers/brokers in the UK market but how do you know which one to go for?
Here are some things to keep in mind when you are looking for a Mortgage Broker:
- Are they whole of market? Ideally, you want to be working with a Mortgage Broker that has access to a number of lenders on the market they can work with to make sure you get the best access to lenders available
- Do they charge a fee? If you are on a limited budget and want to control costs, there are a number of fee-free mortgage advice services available which will be able to offer guidance at no cost
- Are they experts in their niche? If you are a landlord with lots of buy-to-let mortgages you will want to be working with a mortgage broker that has experience with working with large property portfolios and specialist lenders to find you the right solution
- What else are you getting? We all like to get more than we bargain for, whether that’s a little more rent, cheaper utility bills and lower mortgage rates. As part of the mortgage advice service, it is always a good sign when your mortgage broker asks you about your general insurance and life cover. It might not be an immediate need but the fact it is highlighted is important especially as building insurance is a requirement in your mortgage terms and conditions!
Lofti Mortgage Lords
Lofti isn’t just a platform to manage properties and tenancies, as a landlord you will also have access to the Lofti Mortgage Lords – Mortgage Lords?! Yes, they are in-house mortgage brokers that specialise in buy-to-let mortgage advice, experienced with property portfolios and all the wonders of buy to let including cladding, HMOs, multi-unit, Japanese knotweed and everything else in between.
How can Lofti Mortgage Lords help you?
Being experts on the Buy to Let Mortgage Market makes Lofti the ideal place for landlords and portfolio property owners to get access to mortgage advice. Whether it’s a remortgage, a new purchase or a mortgage query around your property portfolio the Lofti Mortgage Lords can help.
Why you should use Lofti for your mortgages?
Some of the reasons why we think our Lofti Mortgage Lords are the best in buy-to-let mortgage advice:
- experts on the buy to let mortgage space – Lofti Mortgage Lords are dedicated to the buy to let mortgage space and work exclusively with landlords and portfolio owners for all things mortgages
- experienced with specialist buy to let and portfolio lenders. Being focused on the buy to let space, the Lofti Mortgage Lords work closely with buy to let specialist lenders on a regular basis keeping them in the loop with lender developments & criteria updates
- Access to the Lofti Documents Hub – To save documents and information in multiple files, books and diaries, landlords can make use of the free Lofti Documents Hub where they can store all their property data including important documents like EPC certificates and mortgage statements with custom reminders so they never miss a renewal
- Free Online Service – Lofti Mortgage Lords will receive commission directly from the lender for the work they do for the lender making the Lofti mortgage advice service completely free for landlords to use
- Mortgage Health Check – too early to remortgage but still want a chat? Our Lofti Mortgage Lords are available to help review and optimise your property portfolio to help landlords stay on top of their buy to let properties
Oh, and some good news: BBC News, Five-year mortgage rates back below 6% – BBC News
What does a mortgage broker actually do?
It’s not rocket science but there is a lot of work that goes on behind the scenes when mortgage brokers are working to provide solid mortgage advice.
- Fact-finding and document collection. This is where the mortgage broker will collect information about you and your personal situation to build up a picture of you and collect documents that are required by the FCA and Mortgage Lenders to provide information about your income and expenditure, identification, proof of address etc.
- Researching the mortgage market and liaising with lenders – Once your mortgage needs have been discussed, your mortgage broker will research the market to find suitable lenders and products. As part of this process, it is common for mortgage brokers to contact lenders and their teams to ascertain whether or not the scenario will fit their appetite, review affordability calculators and ascertain their service levels to manage expectations on the mortgage journey timeline
- Submitting the mortgage application and managing to offer – After the recommendation has been made and everyone is happy, your mortgage broker will submit the mortgage application fully to the lender and manage the application to offer and help with getting to completion
- Reviewing general insurance – With the mortgage now complete your mortgage broker should make sure your property is protected and has the correct level of cover in place and has had a good conversation around life insurance.
Not forgetting to mention hours spent on hold, countless documents checked and vetted.
Now just to find your deposit…
Preparing for a mortgage application
Here is a list of things you can do to help you prepare for a Mortgage Application:
Be on top of your credit report
It might sound a bit harsh, but your credit report is a reflection of your account conduct and poses as your ‘Financial CV’ which lenders will have information from to understand how you manage all your credit accounts, whether that’s a phone bill, mortgage direct debit or bills, they all contribute to the overall rating or score the credit agency uses to grade your conduct.
Having a report littered with missed payments and defaults will reduce the pool of lenders you will have access to and will most likely cost you more at higher rates. The lesson here is:
- keep on top of your outgoings
- demonstrate good account conduct
- keep on top of your credit report
Keep your property portfolio organised
As a landlord with maybe a few or a large number of properties, it is best practice to keep information in one place that is easy to access, update and share when required.
With Lofti Documents Hub you can keep your property portfolio and all the key compliance information in one safe easy-to-access cloud that you can call upon for reviewing your portfolio and for when you come to remortgage
Have your A team ready
When it comes to your mortgage, ideally, you will want to have a trusted group of professionals at each stage.
Whether that’s a skilled accountant or trusted conveyancer all in the loop with your mortgage broker will make communication and updates much easier and will help make for a smoother experience when you do go through the mortgage process
Think about your portfolio as a business
You might not realise it, but having a portfolio of properties is actually a business. Lenders tend to look at it like that hence the request for business plans and assets and liabilities.
Like any business it is important to have a Plan B – this could be a war chest of savings or rent guarantee insurance to protect you from the unknown and any bumps in the road such as vacant periods.
This also extends to your mortgage requirements, are you buying to hold and invest in the property? Is this a short-term venture with a new property type in a new area?
Having a vision of what you want to achieve and what you expect from your portfolio will make the conversation for a more structured mortgage advice interaction
You are likely to attend a viewing before you put an offer in for a property. There is also a good chance that you will conduct tenant referencing on any potential tenants that have made a rental offer on one of your properties, so why not take the same approach when it comes to mortgages?
This isn’t a formal process but, working with a top-class mortgage broker, will make sure to check the scenario with lenders almost like a litmus test to see if there is appetite. This should make for a smoother all round mortgage experience and avoid any surprises that might pop up
The bigger picture
You might be looking to remortgage one of the properties in your portfolio and think that’s all that matters, right?
If you are the lucky owner of a portfolio of properties, lenders will want to know the background information of each one – this includes the loan to value, types of property, tenant profile and whether or not you might use an agent to manage them.
Luckily, the landlords that use Lofti Documents Hub will have that information, ready to call upon when needed. Less time trawling paperwork, more time finding great investment opportunities.
Even the FT knows how important it is to get mortgage advice for Buy-to-let landlords under strain from mortgage rate rises
Mortgage related fees
With Lofti, our Mortgage Lords do not charge a fee for the service they provide, however, that doesn’t mean along your journey you don’t have to pay fees and charges…( If only everyone was like Lofti)
Below are some of the fees you might encounter.
As well as paying the lender for the mortgage each month, it is very common to have a mortgage product fee. This can be added to the mortgage or paid upfront – remember, if you do add this fee to the mortgage it will mean paying more each month as part of your mortgage.
Early repayment charge
This charge usually only applies if you repay all or part of your outstanding mortgage earlier than the deal period or term. For example, if you have a 5-year fixed mortgage product and 2 years in you decide to repay your mortgage, then you can expect to pay an early repayment charge on top of what you pay back that was outstanding mortgage balance wise.
Put simply, this is a nominal fee you pay to the lender for closing your mortgage account.
As part of assessing your mortgage application, the mortgage lender will value your property. Some will charge a flat fee which could change depending on the style of property and the price bracket the property falls into, whilst others will not charge at all.
These fees are more common with specialist lenders, where cases are more complex. The lender will charge a small fee for simply applying for a mortgage with them. This fee is most of the time non-refundable, regardless of the outcome.
Mortgage account fees
Another small fee from the lender is to cover the administration costs of the lender when they set up, maintain and close your mortgage.
Telegraphic transfer fees
This fee will pay for the transfer of money from your mortgage lender to your solicitor.
Oh, and just in case you might have forgotten, stamp duty costs and conveyancing fees are also ones to be aware of, with buy to let property paying a higher rate of stamp duty.
Why landlords should use Lofti for mortgage advice
Look, we appreciate that Landlords know their stuff. Our Mortgage Lords love buy to lets and the thrill of finding a great lender and mortgage deal for your 8-bed HMOs or a multi-unit freehold block is priceless.
Lofti was born out of a need and desire to try and make the lives of landlords that little bit more simple. Being a landlord is often misconstrued, there is a lot of hard work, long nights and good willed landlords that are trying their very best to create a pleasant environment for tenants to enjoy whilst providing a fair return on all the investment that has gone into providing a safe and decent quality home.
We get all of that.
With feedback and speaking to the landlord community, one thing always comes up top – TIME.
How can we give landlords more time? Well, as we have mentioned before – The Lofti Documents Hub allows you that central database to store all of your property information and when it’s time to deal with all things mortgages, our wonderful Lofti Mortgage Lords that specialise and work only on Buy To Let mortgages are on hand to whizz you through the process – so you can get on with doing the things that mean the most.
Lofti, Team Landlord for Life!
As a parting gift, here is the Government’s latest white paper on A fairer private rented sector – GOV.UK (www.gov.uk)