The Exceptional Broker s Handbook A guide to specialist mortgage cases. For use by professional intermediaries only

Transcription

1 The Exceptional Broker s Handbook A guide to specialist mortgage cases For use by professional intermediaries only

2 2 The Exceptional Broker s Handbook Welcome to The Exceptional Broker s Handbook A guide to specialist mortgage cases At Kent Reliance, specialist mortgage cases are our bricks and mortar. We are passionate about providing the best tailored solutions and proudly consider ourselves experts. As more clients seek out specialist mortgages designed around their unique circumstances, we re dedicated to sharing our insights and experience and helping brokers feel completely at home with the specialist market s distinct needs. In this handbook, you ll find: How to recognise a specialist case Why specialist cases need a specialist provider Insights to help you with each of the main case types Case studies demonstrating how we can provide the right solution

3 3 The Exceptional Broker s Handbook Kent Reliance Exceptional for specialist mortgages Our vision At Kent Reliance, we believe in the exceptional. And that means providing unrivalled service and the best quality specialist solutions to you and your clients. We are part of OneSavings Bank, one of a new breed of banks setting new standards for the industry and providing a true alternative to established mainstream providers. And it s a model that s really working. Last year, as our reputation grew among brokers in the UK, our mortgage business grew by 47%. Our products and services are built on three pillars: Specialist focus We thrive on the unconventional cases that don t fit the criteria of mainstream lenders Flexibility We manually underwrite every case and operate flexible lending, reviewing each case on its merits Service As our client, you ll benefit from a dedicated support team and specialist underwriters. Each of our experts understands the unique demands of specialist cases and has a reputation for high levels of personal service

4 4 The Exceptional Broker s Handbook What are specialist mortgage cases? It s an increasingly familiar story a client with needs and circumstances that deviate from standard criteria, applies for a mortgage with one of the more mainstream providers and is rejected because they fail to match an inflexible list of criteria. What this person needs is a specialist mortgage from a flexible and personal provider an off-the-shelf product simply won t do the trick. That s where we come in. We offer specialist Residential, Buy to Let and Commercial mortgage solutions for people with needs that don t fit traditional categories. Common scenarios driving the increasing popularity of specialist mortgage solutions include: Large property portfolios clients with three or more properties Large property cases cases where the value exceeds the lending ceiling of many mainstream providers Homes in Multiple Occupation (HMOs) loans on properties involving multiple occupants Expats clients who want to purchase or rent out a property while living overseas Complex income cases clients who don t receive an income that fits into any standard pattern Other types of specialist cases We also specialise in creating bespoke mortgage solutions. So, if you have a client with exceptional needs, we ll be happy to discuss unusual, niche and tailor-made lending opportunities with you; in both Buy to Let and Residential.

5 5 The Exceptional Broker s Handbook A helping hand from a specialist provider Mainstream lenders are focused on providing mortgage products that fulfil the general needs of the mass Residential and Buy to Let markets. They handle large volumes of traditional mortgages that meet their defined criteria. However, this computer says no attitude often precludes specialist cases. And that makes bespoke underwriting and a flexible policy on lending criteria invaluable for brokers. Specialist mortgages don t follow the same rules as mainstream. That s why we have specially developed systems and procedures and expertly trained personnel, so you and your clients will always be supported and kept informed throughout the application process.

6 6 The Exceptional Broker s Handbook Large property portfolios Understanding the challenges If you have a client with a large property portfolio, they may have experienced difficulty securing new loans for mortgages reaching maturity. The complexity of the risk involved, combined with the high total loan value of their portfolio, may put their case beyond the lending criteria set by mainstream lenders. Additionally, the income they receive as a landlord can be complex to assess and may potentially originate from a variety of sources, including salary, company income, rental income, or a combination of all three. This kind of case is particularly suitable for clients who have set up an SPV (Special Purpose Vehicle) for their property or portfolio of properties. We help by providing: More flexible lending criteria than the mainstream providers Bespoke underwriting for each and every case Find out more Discover the right product solution for your clients for large property portfolios below Buy to Let Specialist

7 7 The Exceptional Broker s Handbook Specialist mortgages in action: The large property portfolio A professional landlord with a large portfolio and a number of lenders who do not wish to offer a deal at the point of maturity. The scenario Dan is an experienced investor in Buy to Let with a portfolio of more than 30 properties. He has loans maturing with a number of lenders, however some of these providers no longer offer new mortgage loans. So, that means he needs to find a new lender for an extensive part of his portfolio over the next 12 months. With an average LTV of 65% (and some cases as high as 90%), he is concerned that he may have problems finding a lender willing to take on a significant portion of his portfolio. In the future, he is also looking to extend his portfolio when the right opportunities arise. The Kent Reliance specialist solution Dan s two initial maturing cases were presented and assessed manually by our experienced Buy to Let underwriters. Both cases met criteria for rental cover and were within the LTV limit. In order to assess his eligibility, Dan s portfolio and experience as a landlord were also assessed and an overall limit for individual cases was agreed. Each case will be assessed independently within that limit. Kent Reliance was happy to support the lending and Dan is confident that his properties could be refinanced as they reached maturity.

8 8 The Exceptional Broker s Handbook Homes in Multiple Occupation (HMOs) Understanding the challenges In the Buy to Let market, it s common for landlords to own residential properties designed to house more than one person or family. In university towns in particular, this type of property can represent a significant opportunity. However, when applying for a mortgage, the value of loan often exceeds that acceptable to many mainstream lenders. Furthermore, mainstream lenders find it too much hassle to deal with these kinds of opportunities because of the amount of manual intervention involved. Not to mention that landlord income can be complex to assess, potentially originating from salary, company income, rental income or a combination of all three. We help by providing: More flexible lending criteria than the mainstream providers A unique understanding of the issues relating to HMOs Bespoke underwriting for each and every case Find out more Discover the right product solution for your clients for HMOs below Buy to Let Specialist

9 9 The Exceptional Broker s Handbook Specialist mortgages in action: Homes in Multiple Occupation A landlord looking to add to her small portfolio of HMO residences with a high LTV purchase. The scenario Caroline, an experienced landlord, is looking for a mortgage of 750k for an 80% LTV to purchase a large property in a thriving university town. She intends to split the property into flats and rent it to some of the town s more privileged students. With six bedrooms and bathrooms, the property presents a good opportunity for the rental market. Caroline has owned two HMO properties for two and three years respectively. The Kent Reliance specialist solution First, we manually assessed the application with an HMO underwriting expert. Next, we assessed Caroline s credentials, finding her to be an experienced landlord with a good understanding of HMO management. We determined that the flats offered good yields and decided to proceed with lending Caroline the money she needed. An independent valuer has confirmed that the property she is now looking to buy is located in a desirable location and of a standard needed to achieve Caroline s objective of high-end letting.

10 10 The Exceptional Broker s Handbook Complex income Understanding the challenges Freelancing, consultancy and operating as a limited company are increasingly popular and profitable forms of employment. However, proving income without the benefit of traditional payslips can be tricky. And that can mean mainstream providers are regularly turning down people with high levels of income, because they don t fit into a simple category. But significant and reliable income can come from many different sources, including freelance and limited companies, income derived from dividends, profit drawn from companies and many more. Proving affordability and consistency of earnings for this audience is perfectly achievable. We just know it takes a bit more latitude to prove it. Bank statements, audited accounts, tax assessments, details of assets, investments and equity, retainer contracts, pensions statements and more can all be used to support a mortgage application. We help by providing: Extensive experience in complex income cases Help with identifying and approving alternative proofs of income Bespoke underwriting Personal service, ensuring expectations are managed throughout the process Find out more Discover the right product solution for your clients for complex income clients below Residential Standard

11 11 The Exceptional Broker s Handbook Specialist mortgages in action: Complex income case A landlord looking to expand her large property portfolio but having difficulty proving her income. The scenario Haru is an experienced landlord based in the South of England. She has a large portfolio and is now looking to purchase a high-value property in London. However, she is self-employed and earns her income from operating as a limited company. High street providers have turned Haru down because her income calculation did not meet typical requirements. This is because she intends to retain the majority of the profit she receives in her business to optimise tax and improve the quality and value of her existing portfolio. The Kent Reliance specialist solution Our experienced underwriters assessed Haru s accounts and were able to verify significant retained profits within her business. Her accountant confirmed that Haru was capable of drawing the funds required at any time. We approved the loan based on the scale of retained profits, and the prime location of the property.

12 12 The Exceptional Broker s Handbook Large mortgage cases Understanding the challenges The mainstream mortgage market is designed to cater for the average homebuyer. But what about people looking to purchase large, high-value properties, often as Buy to Let investments? Many providers have rigid caps on the maximum loan value they will provide, irrespective of individual circumstances. So that means people with significant wealth or income can be rejected, even if their application is a perfectly viable loan opportunity. We help by providing: More flexible lending criteria than the mainstream providers Bespoke underwriting Expertise to deal with complex income structures Personal service which ensures expectations are managed throughout the process Find out more Discover the right product solution for your large mortgage clients below Residential Standard

13 13 The Exceptional Broker s Handbook Specialist mortgages in action: Large mortgage case Experienced landlords with high non-property income who require excess income cover to purchase a high-value London property. The scenario Clive and Rachel are partners in a legal firm and have a history of investing their money in property. They are looking to remortgage the loan on an existing Buy to Let property valued at 2m. They also want to take some additional money out as a deposit for another property. In total, they are seeking to increase the LTV to 70%. However, due to the high value of London property, the predicted rental income is around 110%, well below our minimum requirement of 125% at 5%. The Kent Reliance specialist solution Our senior underwriter assessed the case manually and Clive and Rachel were found to have a combined gross income of 730k per annum from their legal firm. Their combined net income of 32k per month was more than sufficient to meet their monthly costs of 10k per month, plus the shortfall on their Buy to Let of 3k per month over and above the projected rental income.

14 14 The Exceptional Broker s Handbook Expat cases Understanding the challenges Expat clients represent a unique set of issues for providers. Even if they work, or have worked, for a recognised international company, they may struggle to get a mortgage after living abroad for a significant time. Their income may be complex to assess and prove. We help by providing: Extensive experience working with Expat cases A specialist team dedicated to working with the unique and often complex needs of the Expat Guidance with regards to your client s documentation of employment income Solutions for non-standard Expats Find out more Discover the right solution for your clients with our mortgage guides Buy to Let Expat

15 15 The Exceptional Broker s Handbook Specialist mortgages in action: Expat Buy to Let A British expat hoping to convert her property to Buy to Let while she works abroad. The scenario Rose is a British passport holder working in Hong Kong for a UK pharmaceutical company. To help her generate an additional income for the two years she is away, she wants to change her current UK residential property to Buy to Let. However, as she is working abroad and unable to provide the documentation required by the larger lenders, she has struggled to find the right deal. The Kent Reliance specialist solution We found that Rose s house was of a good quality, and average rental cover in the area met our minimum requirement. A credit search revealed that Rose was on the electoral roll while living at the property, with good credit history showing secured and non-secured credit had been well maintained. Her application was submitted with all required ID, documentation and fees, and we were happy to offer her the loan she needed.

16 At Kent Reliance, we are proud to offer brokers an exceptional level of personal service. To find out more: Visit kentrelianceforintermediaries.co.uk Call If you re currently not a Kent Reliance broker you can see the full list of our distribution partners at kentrelianceforintermediaries.co.uk/contact-us