PreciseAug 31 2017

Precise pledges easy ride on underwriting changes

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Precise pledges easy ride on underwriting changes
BySimon Allin

Precise has pledged to take the burden off intermediaries as changes to underwriting rules for portfolio landlords come into effect by 30 September.

The specialist lender has assembled a Portfolio Team to help with the additional information required by the new regulations -  a business plan, assets and liability statement and details of the existing residential property portfolio.

The lender’s criteria are largely unchanged, with the exception that the existing residential portfolio may be subject to interest rate stressing, depending on the assets and liabilities of the landlord.  

Typically, the interest rate stress will reflect the new business market in terms of customer type and income coverage ratio calculations.

Precise has not made any changes to the decision in principle or application systems, and mortgage intermediaries will not need to key the existing portfolio into the lender’s systems.

Additional information can be supplied in any format, including the lender’s own forms, and this will be inputted by the Portfolio Team.

The existing portfolio will then remain valid for six months, making future applications more straightforward.

An in-house portfolio platform has been developed to help assess the existing portfolio and features the use of automated valuation models to calculate loan-to-values and interest cover ratios.

New forms will be available on the lender’s website from 25 September.

Managing director Alan Cleary said: “We thought long and hard about how we could minimise the disruption to the mortgage intermediary and to the landlord whilst meeting the new requirements and have invested a significant amount of money and resources to make sure that we take as much of the burden as possible.”

Several lenders have now outlined their approaches to the Prudential Regulation Authority’s (PRA’s) underwriting requirements, with considerable variation as to how they will collect the information and stress test portfolios.

Liz Syms, chief executive at London-based Connect Mortgages, said Precise’s approach to the portfolio lending rules could prove very popular with intermediaries.

“Lenders’ offerings vary greatly in terms of how they have interpreted what the PRA requires, but the vast majority need a spreadsheet with information on the existing portfolio,” she said.

“That is something we have all been used to collecting – but there are differences in how that can be presented to the lender.

“Some have one central spreadsheet and we have to manually key that in. One client of ours has 178 properties – that is going to be an absolute nightmare. What Precise are effectively saying is we recognise that part is going to be cumbersome, so we will allow you to give the information to us in any format you wish and we will key it into the system.