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Buy to Let Process Frequently Asked Questions

Posted: 20/10/2017

What has changed in the Suitability Letter?

We have added the below two compulsory bullet points to the ‘Detailed Additional Information Specific to Your Requirements’ section of the Suitability letter.

  • You have been made aware of the taxation levied on BTL property and the potential benefits of arranging your mortgage in an SPV (Special Purpose Vehicle) Limited Company. You were, however, happy to proceed with the mortgage on a standard individual basis. We have recommended you seek independent advice from an Accountant or Taxation Specialist.
  • We discussed the importance of declaring all earned income including income derived from your buy to Let property(s) to H M Revenue and Customs…. INPUT CLIENT CIRCUMSTANCES

 

What has changed in the Processing Sheet?

We have added the below requirements to the Processing Sheet for all buy to let mortgage cases.

  • Buy to Addendum
  • Assured Shorthold Tenancy (if applicable)
  • Latest 3 months’ consecutive bank statements for all accounts
  • Evidence of repayment vehicle for interest only loans
  • Evidence of income into retirement (if applicable)
  • Proof of deposit (if applicable)
  • Additional supporting paperwork. Including credit report, mortgage statement, validation of interest only, repayment strategy etc

 

In the Cash Flow Forecast section of the Buy to Let Addendum, if this is the customer’s first buy to let, then they wouldn’t know all of this information?

The Cash Flow Forecast should provide an indication of whether the buy to let will be affordable for the customer. It is key, particularly for first-time landlords, to make them aware of all of the costs involved in renting a property. For this reason, the Cash Flow Forecast should be completed for first time landlords based on the expected costs.

 

The Processing Sheet prints over four pages, can this be altered so that it prints over two pages?

The layout of the Processing Sheet has been amended. You can download the latest version of the Processing Sheet from the Document Library in the Case Portal.

 

Is the Buy to Let Addendum required if the customer only has one buy to let?

The Buy to Let Addendum is required on all buy to let cases, regardless of whether the customer is looking to purchase their first buy to let or has a large portfolio.

 

In the Portfolio section, what do you want to see for the fields ‘Owner’, ‘% Owned’ and ‘Ownership’?

  • Owner: Name of customer(s) who legally owns the property.
  • % Owned: The percentage of the property which the customer owns.
  • Ownership: The ownership structure. E.g. limited company.

 

Should the Cash Flow Forecast show just the information for the property being purchased/ remortgaged or the whole portfolio?

The Cash Flow Forecast needs to show the income and expenditure for the entire portfolio so that you can clearly identify any shortfalls, risks and sales opportunities.

 

What does the field ‘Balance’ at the top of the Cash Flow Forecast refer to?

In month one, the ‘Balance’ inputted should be the opening balance of the customer’s account. In month two, the ‘Balance’ will be equal to the ‘Total Balance’ of the previous month. For example, the ‘Balance’ in month two would be equal to the ‘Total Balance’ in month one. We will be renaming this field to ‘Running Balance’ in the online version to make the purpose clear.

 

Does the new Suitability Letter and Processing Sheet apply to residential mortgage business too?

Yes, the Suitability Letter and Processing Sheet should now be used on all new mortgage and buy to let business.

 

Does the Buy to Let Addendum need to be completed on product transfers?

Yes, the Buy to Let Addendum needs to be completed on all new buy to let business; including purchases, remortgages, further advances and product transfers.