Karen Bennett, sales and marketing director, Commercial Mortgages, Shawbrook Bank writes:
This past year has been an excellent one for UK property investors. It seems the market is on the up and up, and more people than ever are looking to get involved with buy-to-let in particular.
We work closely with property investors across the country via our broker partners and – as a lender on the other end of the finance decisions – we wanted to share how we’ve seen 2013.
We’re in constant conversation with our brokers and we value their insight into the property investor market highly. Our modus operandi is to deal with clients exclusively through brokers, rather than to go direct with a branch network. We prefer this business model as it means that we’re the right fit as a lender for them and the clients our brokers submit are the right clients for us.
There’s been a great deal of positive talk around property investment recently. According to the Council of Mortgage Lenders there will be an extra £6.25 billion available next year for landlord mortgages, bringing the total amount to £25 billion. The readiness of so much finance is really encouraging for property investors, but it should be treated with a degree of caution.
We are currently experiencing extraordinarily low interest rates but they won’t stay this low forever. Once they rise again, property investors need to make sure that they don’t get caught out and that the yield they get from their properties covers the new, higher mortgage payments. Your lender should help you ensure that any financing you take out is sensible within the context of your overall portfolio.
When looking for finance, we hear from our brokers that property investors often go to their high street bank first – perhaps because of an existing relationship with them, or maybe because they’re just not aware of other options.
However, by taking this approach they may be missing out on alternative sources of finance that would be better suited to them. For example, dealing with a broker will give a more thorough overview of the lending options out there than a high street bank which will be looking to push its own products.
Brokers are impartial and, as experts in the various lenders’ complex criteria, they will be able to give the best insight into which lender will provide the most suitable funding.
Brokers are able to add even more value after the deal has been agreed; they support the packaging of applications, ensuring it meets the requirements of the lender and manage the case through to completion liaising with all parties in the process and often acting as the vital communication link. This ensures that not only do you find the right deal, but that the road to completion is smoothed as well.
There’s no doubt that the stars are aligned for the property investor market going into 2014 and while interest rates remain low it will be very smooth sailing. However, even more than a booming market, it’s important to create a sustainable property investment arena, and we’re working hard with our brokers and clients to achieve this.