Buy-to-let loans should not be advised and recommended on the price alone, says Bob Young, chief executive of Fleet Mortgages.
Mr Young says the adviser needs to look specifically at the criteria, as well as important factors such as the revert rate for a fixed-rate loan and completion fees.
He says while ‘best buy’ rates do exist, given the very different criteria some lenders offer and the big differences in fee levels, this all has to be taken into account in order to get the most suitable deal for an individual client.
Knowledge of the local market and lenders’ offerings is essential for advisers, says Charles Haresnape, managing director of mortgages and commercial lending at Aldermore. An adviser should know both the territory and the service offerings of lenders inside out.
While the basic rates and fees are important, Mr Haresnape says lending criteria and relationships with lenders, business development managers and packagers are integral to ensuring as smooth a process as possible.
When advising a client, Mr Haresnape says any additional research on the local buy-to-let market, such as hotspots, highest yielding areas or problem areas, will go a long way to ensuring that your client chooses an appropriate property for their situation and has a clear idea of what returns they can realistically expect.
He says: “Advisers should aspire to be buy-to-let experts in their given market.
“An in-depth knowledge of rental calculations will help determine what borrowing options are available so brokers can add additional value in their services by weighing up the merits of various products, such as term trackers or fixed rate mortgages, to ensure their client receives the best deal available.
“Occasionally, the best deal on offer can add greater degrees of complexity, so brokers who know the market well can gain an advantage.”
Most lenders focus on single property buy-to-let transactions, so Mr Haresnape says it is important that brokers build relationships with lenders that also accept more complex deals.
More complex deals include houses in multiple occupation (HMO) and lending to trading limited companies as opposed to a sole name deal, which Mr Haresnape points out in certain circumstances can help clients make the most of their investment.
As there is currently a lot of choice in the market and competition will remain rife as demand continues to increase, Dale Jannels, managing director of Atom, agrees that advisers should seek out all of the buy-to-let lenders.
Advisers who look around will find some are offering fantastic opportunities through specialist packagers and distributors, he says.
