"No matter how inconsequential, having extra details can prevent delays and allow brokers, landlords, and lenders to find solutions to potential obstacles."
With the outlook for the buy-to-let market remaining positive during the first months of 2021, specialist lender Zephyr Homeloans shares key insights for successfully submitting specialist BTL applications and avoiding delays.
1. Back to basics
Understanding the lender’s prerequisites for submitting cases is key for getting a case accepted. Often lenders decline cases because they did not meet the scope of their basic requirements. For example, a common lender prerequisite on standard applications is that the applicant has owned either a residential or buy-to-let property for at least a year.
Lenders also differ widely on the types of property they will accept. For example, some lenders won’t lend on new-build flats, but will lend on new-build houses.
2. Common mistakes by limited companies
Incomplete or incorrect information on applications can cause an unnecessary delay in processing cases. Two examples of common errors:
• Incorrect Standard Industrial Classification (SIC) Code on Limited Company applications misclassifies the professional landlord’s sector.
• Not identifying all directors on the application or misunderstanding the criteria. Zephyr, for example, allows up to four directors to be named on the application. The directors must hold at least 60% of shares between them and the limited company must be solely focused on buying, selling or managing residential properties.
3. Portfolio complexities require more information
Portfolio landlords often have a more complex application process because of the range of information required. Missing data frequently causes delays in the application process.
Brokers can establish what the lender needs at the beginning of the process to guide their clients through the process more effectively. For example, some lenders require a business plan, cash flow statements and a property schedule in addition to standard documentation to support all portfolio applications.
While a small detail, lenders often have a specific format or process for receiving the necessary portfolio lender’s information. Requirements can vary – so check first. At Zephyr, a simple upload of the property schedule onto the eTech BTL Hub allows access to the whole portfolio.
By understanding the requirements at the onset of the application process, brokers and landlords can efficiently work through a checklist of items.
4. Extra detail matters
Additional situational or financial information outside the scope of the application questions may also lend support. For example, if the landlord is looking to raise capital of more than £25,000, they may need to provide additional information to the lenders, such as a breakdown of how the funds will be used.
The same goes for personal earnings or surplus portfolio rental income. Always include details and provide evidence, especially if affordability is in doubt.
No matter how inconsequential, having extra details can prevent delays and allow brokers, landlords, and lenders to find solutions to potential obstacles.
5. Check again!
Submitting a specialist BTL lender application can involve some complexities, but detailed attention to submission guides and opening up a dialogue with the lender’s business development team to understand their process may avert further complications and interruptions.
Once the application is ready, double and triple-check for errors and cross-reference with the documentation.