Mortgages  

New buy-to-let mortgage from Together aimed at sub-prime market

New buy-to-let mortgage from Together aimed at sub-prime market

Specialist lender Together has unveiled a sub-7 per cent first-charge buy-to-let mortgage for borrowers with a 35 per cent deposit.

The loan has been discounted to 6.99 per cent to 65 per cent loan-to-value for borrowers who would typically not pass the qualification criteria for mainstream lenders.

The maximum loan size is £500,000 with an acceptance fee from 2 per cent – depending on the loan amount.

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Marc Goldberg, Together’s commercial chief executive officer, said that the lender took the decision to lower rates to help buy-to-let investors with their affordability calculations as they adapt to the new tax implications.

He added that the decision also took into account responses to feedback from its broker partners.

Last month, the lender introduced a five-year buy-to-let fix to meet the demand from the growing market, according to the lender.

In September, the group announced record results, with new lending across the group up nearly 40 per cent on the previous year. In addition, annual new lending for the year to 30 June 2016 surpassed £1bn for the first time in its 42-year history.

It also announced it had closed a £375m bond issuance, thus broadening its funding capacity.

Brokers can view plans and pricing on https://www.mybrokervenue.co.uk/ or find out more at www.togethermoney.com

Provider view

Mr Goldberg said: “We’ve seen continued growth in lending for buy-to-let property purchases, and are committed to continually improving our offering.

“This follows our recent introduction of a five-year fixed-rate buy-to-let mortgage, plus an increase in loan size, helping us to meet the demand from brokers.

"We want to ensure that buy-to-let investors, be they first-time landlords, seasoned property professionals or limited companies, have a broad choice of products with competitive rates.

“We apply our usual common sense approach and review all cases individually, and that’s been a big part of our success in this market, since no two cases are alike.”

Adviser view

Jane King, mortgage adviser at Ash-Ridge Private Finance, based in London, said: “The rate is horrendous, but we must remember that Together is a sub-prime lender and will have to compensate for the heightened risk it takes on. These types of loans are likely to suit individuals with adverse circumstances who are desperate for a loan.

“However, underwriters for some building societies are sometimes willing to overlook a small blip in an individual’s credit history, so it is worth going to a building society first for the sake of a cheaper rate of interest.

“Because rates are so competitive in the prime market, more and more lenders are seeking to recoup their profit margins by servicing borrowers at the bottom of the market because there is a little choice of lenders at this moment in time.”

Charges

From 2 per cent – depending on the loan amount.

Verdict

The sub-prime market has certainly re-emerged from the fringes of the mortgage sector in the ensuing years of the financial crash. The market has since been rechristened as ‘specialist’ – shedding the toxic sub-prime label. On one level, the proliferation of these loans should be welcome because they offer borrowers with adverse circumstances a lifeline. However, the rate of interest is extortionate, but understandably so given the heightened risk such business presents to the lender.