BTL lenders continue to innovate

Ramesh Sharma

April 22, 2006

The launch of Capital Home Loans’ BTL renovation product, which requires no rental cover to secure up to 85 per cent loan-to-value (LTV) for light refurbishment work, has been attributed to a demand by the mortgage market.

However, with increased competition within the BTL market, specialist lenders have had to think of new ways to stay ahead in the game.

Mark Sismey-Durrant, chief executive of Heritable Bank, said: “If you are a niche player, you inevitably have to become more specialised, especially if more players come into your market. You have to use your experience in the market to give your products a different edge or focus because now, with more mainstream players coming in, the market isn’t as specialised any more. That is why you see lenders, such as ourselves, offering niche areas such as renovation, unusual properties and lending to foreign nationals.”

Trevor Child, head of marketing at Capital Home Loans, agreed: “We have to offer more opportunities as if we just offer ordinary BTL, it’s not specialist any more. The pricing now is as good as a mainstream house product so specialist mortgage lenders have to rely on niches to maintain competitiveness.”

Broker have noticed this innovation in products. Jason Richardson, director of YooToo Financial Services, said: “They are becoming more innovative as, for example, they used to ask for rental incomes of 130 per cent of the interest payments but some lenders will now go to 100 per cent. They are helping more people into the market so it’s good news.”

Kevin Morgan, managing director of Consilium Financial Planning, said: “The market has moved on and niche players are having to rediscover themselves to maintain their market edge, which was inevitable as the market became more established.”

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