"Buy-to-let is underpinned by very strong fundamentals – demand for housing in the UK exceeds supply, and property ownership out of the reach of many."
FR: You joined Castle Trust Bank during a national lockdown – what have been the challenges in starting a new role during lockdown, and how have you overcome those challenges?
One of my favourite things about working in this industry is the people. I love working with brokers and underwriting teams – and so to start a new role without being able to get out and meet people has been really difficult. Of course, in the current environment, tools like Zoom, Teams and WhatsApp really helped me reach out to brokers and have shown me what an excellent team we have here at Castle Trust Bank. I can’t wait to meet everyone properly.
FR: What are your objectives for the first year in your new role?
Castle Trust Bank is in a really solid position. We’ve developed a great reputation for delivering tailored solutions in specialist buy-to-let and we plan to build on this by broadening our distribution and making our unique approach available to more brokers. We have recently been added to the panels of L&G, Sesame and PMS and there will be further announcements in the future. So, my role is to make sure that as many brokers as possible can access Castle Trust Bank for their clients and they understand how our offering can stand out against the competition.
FR: And how would you say your offering does stand out against the competition?
We can offer truly flexible lending solutions for buy-to-let mortgages, bridging and development finance, to UK residents, ex-pats, foreign nationals, SPVs and trading companies. A good example of this is our bridge-to-let product and we have seen huge demand from property investors who want to get up and running with their first holiday let or HMO.
Some lenders will want to see a track record in these areas, so a good way to get started is to use bridging to buy the property and then refinance onto a term mortgage once there is some track record in place. The downside of this is that it can prove expensive if the client is unable to secure a suitable exit route in good time. However, this downside is overcome if the exit route is agreed at the outset, with bridge-to-let.
In fact, if it’s possible to demonstrate the track record of the holiday let before the end of the bridging term, Castle Trust Bank allows customers to switch over to the cheaper rate on the term finance before the end of the bridging loan. The minimum commitment on the bridging finance is that three months’ interest payments must have accrued or been paid, and then the customers have full flexibility to switch to the longer-term product. This is what we mean by a truly flexible lending solution.
FR: Do you expect more brokers to start discussing hybrid solutions, like bridge-to-let, with their clients?
Absolutely, it makes total sense for a number of reasons. Property investors are becoming more sophisticated and looking at ways of enhancing their returns through investments like holiday lets, HMOs and multi-unit lets, and bridging can provide a good entry into these areas. Bridge-to-let offers the flexibility of bridging, combined with the certainty of a pre-approved exit, which is the best of both worlds. And it’s a more streamlined process, with one application for both loans, so it can cut down of delays and costs.
FR: What are your predictions for the buy-to-let market?
Buy-to-let is underpinned by very strong fundamentals – demand for housing in the UK exceeds supply, and property ownership out of the reach of many. So, there will be continued demand for rental property. We are now seeing some interesting trends in particular areas of property investment as we begin to emerge from the pandemic.
With the rise of holidaying in the UK for example, more investors are looking at holiday lets. We also expect to see continued demand from both investors and tenants for HMOs. Official government guidance considered HMOs to be no greater risk than single households when it comes to Covid, and they will continue to provide an important form of affordable housing. There will be a lot of opportunities out there – for investors and for brokers.
FR: What tips do you have for advisers to grow their business this year?
When I joined the Cheshire Building Society in 1998, the first lesson I was taught about mortgages was, “Would you lend your own money to this client?”
This was great advice then and it remains great advice today. For brokers – if you come across a particularly interesting or complex case, think about whether you would lend your own money on it. If you would, then it’s probably a good case, so go and see if you can work with a flexible lender that is able to come up with a solution, you will be surprised that there are solutions out there that fit most clients circumstance. You know the High street lenders, now go and find out about the specialist lenders.
FR: If you could see one headline about the mortgage market in 2021, what would it be?
Obviously, a full bounce-back from Covid would be ideal, but I’d also like to see some recognition given to property investors for their contribution to the housing stock.
