Technology-focused broker Habito has entered the mortgage lending space, launching a range of mortgages aimed at individual buy-to-let landlords.
Habito has received a lending commitment of £500m by an ‘FCA-regulated institution’, while it said it expects more investors to come on board in future.
The mortgages are Habito branded but will not sit on its balance sheet, while the broker side of the business will operate separately.
After this initial launch the firm will offer company buy-to-let and portfolio landlord mortgages, as well as a residential range.
Daniel Hegarty (pictured), chief executive of the broker, said: “We exist to free people from the hell of getting a mortgage. For buy-to-let landlords, hell means long waits, inflexible eligibility criteria and application decision uncertainty.
“We’re proud to bring to market a range of products that have been built with landlords in mind: long-term fixed rates, competitive pricing, low deposits and sympathetic to self-employed and older customers.
“We guarantee certainty and speed to offer. It’s the next generation of mortgages.”
The firm claimed that it will provide the fastest mortgage process in the country, with Decisions in Principle (DIPs) being replaced by ‘Habito Instant Decision’, which it said involves deeper checks at the outset and therefore guarantees greater certainty and speed.
The mortgages come in the form of 2-, 3-, 5-, 7- and 10-year fixed rates.
With no fee to 65% loan-to-value they stand at 3.26% fixed for two years, 3.36% fixed for three years, 3.44% fixed for five years, 3.61% for seven years and 3.81% for 10 years.
Ray Boulger, senior technical manager at John Charcol, said: “Although there’s a lot more to recommending a buy-to-let mortgage than rates, they do need to be competitive.
“I’d say the rates are expensive, though there may be less competition with the longer-term deals.”
He added: “The other issue if a broker is also a lender – we know this from the days from when John Charcol was owned by Bradford & Bingley – you have to be careful when offering a product from an inhouse company as you have to make sure it’s the best value product.
“The trouble Habito is going to have is to offer a Habito mortgage they need to prove it’s the best value, and in most cases that’s something they would struggle to do.”
Boulger called for the firm to provide more information regarding its mortgage criteria, like its policy towards the credit impaired.
Habito said the first 15 mortgages ‘taken out’ will receive cashback equivalent to 2.5% of the value of their mortgage, up to £5,000.
Boulger took an issue with that pledge, because he felt it could encourage early applicants to apply without knowing whether they will get the cashback or not – therefore it could be misleading regarding how good a deal they will get.