Specialist mortgage lenders and property finance

Categories: guides | buy to let mortgage guides | property investment guides | commercial mortgage guides | bridging loan guides | development finance guides

There are a large number of high street and specialist mortgage lenders offering buy to let and commercial mortgages, bridging loans and development finance solutions to landlords and property investors in the UK. 

Commercial Trust has relationships with a large range of lenders in both the high street and specialist lending space.

Property investment is seen as a business activity, which means the Financial Conduct Authority do not regulate this area of lending. It is expected that applicants will understand the risks as well as the benefits of these products.

However, we can guide you through the complexities of this area of borrowing.

What is the difference between high street and specialist lenders?

As a general rule, high street lenders prefer straight forward properties and applicants who can demonstrate a proven ability to repay debt, particularly when borrowing against property. This is because lending of this nature constitutes a lower risk of missed mortgage repayments. 

For example, a two-up, two-down property in a city centre location is popular choice for renters, similarly a simple industrial unit in a high demand area will be easily lettable. Straightforward properties reduce the risk of voids and potential mortgage defaults.

When it comes to the borrower, someone who already owns a residential property, or owns another buy to let or commercial property and has demonstrated the ability to keep up with mortgage payments on it, will be more attractive to a high street lender, who typically look to take on lower risk applicants. 

Specialist lenders tend to favour properties which stray from the ‘norm’, this can mean that rates are slightly higher to mitigate the extra risk these properties represent, but criteria can cover an array of quirks and irregularities which mean your property might fit into their niche.

Specialist lenders are also very flexible when it comes to the applicants they will accept and we have helped all sorts of people get the finance they need, even where other brokers or lenders could not help.

Why do you work with so many mortgage lenders?

Choice is king when it comes to getting the most competitive financial solution.

We offer our clients the greatest flexibility possible in the products we recommend, so that each solution we propose matches our clients financial objectives and circumstances closely and represents the most cost effective outcome we can achieve. As a result, we work with as many lenders as possible.

Buy to let mortgage lenders

Whilst buy to let mortgages are a niche within the overall mortgage market, there are still a very large volume of lenders available. 

We work with over 80 buy to let mortgage lenders, which include:

High street banks and building societies who sometimes operate under a different brand name than the one you might recognise, to reflect the fact that part of their business handles buy to let business rather than residential mortgages.

Challenger banks who aim to compete with the high street brands, by offering different product criteria (the rules that reflect whether they will accept a mortgage application of a given type, or not) or interest rates from traditional lenders.

Specialist lenders who typically operate in sub-sets of the buy to let space, focussing on a particular area or type of mortgage requirement that is not offered by as many other lenders.

Limited company buy to let mortgage lenders

Of the lenders we work with, a large proportion will accept applications for a buy to let mortgage via a limited company. As more landlords incorporate, this offering has become increasingly available within the lender space.

Some lenders work with applicants who have an already trading limited company that they are operating a business through, outside property investment. More lenders work with applicants who set up a Special Purpose Vehicle (SPV) (a limited company set up for a just to invest in property).

You can read our guide on making the right choice between limited company or personal buy to let mortgages.

Or, if you want to get straight on with finding a limited company buy to let mortgage call or enquire straight away.

HMO mortgage lenders

When you invest in a House of Multiple Occupation (HMO), your mortgage lender will fall into two broad categories:

1. Lenders who offer mortgages on a small HMOs of up to 6-7 bedrooms
2. Lenders who offer mortgages on large HMOs of 7 bedrooms or more

Small HMO mortgage lenders typically need to see that the property, which is likely to be a traditional domestic home repurposed as a house-share, could easily be re-sold on the residential market as a home for a single family unit. 

This would mean that the property has not had to have significant alterations in order to work as an HMO, e.g. locks on bedroom doors, specialist fire escapes.

It also commonly means that the lender will ask that all tenants are signed up to one tenancy agreement, so that, faced with the unlikely event the property would need to be repossessed by the lender, all tenants would be subject to the same notice period.

Small HMO mortgages carry less risk, because they can be resold as a traditional home. Some high street lenders, who assess them in a similar way to a residential property, will accept them as a security property. So will specialist lender and challenger banks. 

Given the risk is lower than with a large HMO, mortgage interest rates tend to be lower. This is especially true of the commercial arm of high street lenders, who will impose other criteria to further mitigate the risk of lending.

Specialist HMO mortgage lenders and challenger banks will offer mortgages on large HMO properties because they come with more risk. You will not find high street lenders offering mortgages for this type of property as a result. 

Mortgage interest rates on large HMO properties tend to be higher, but this is typically offset by the increased rental income they attract and this type of property can offer very favourable profits.

Holiday let mortgage lenders

Investment in holiday let properties is popular for its potentially high yields. Holiday lets became an increasingly popular choice when demand spiked during Covid-19 travel restrictions. Holiday and short terms lets have remained in strong demand since then.

Be aware that the tax position for holiday lets has changed over time. Investing via a limited company may be more profitable for you in the long-term, especially if you are a higher rate tax payer. 

You will need to get advice from a property tax professional – as mortgage advisors, the team at Commercial Trust are not qualified to advise on this.

Investing in this sector is discussed in our guide to holiday lets.

Commercial mortgage lenders

Fewer high street banks offer commercial mortgages than residential or buy to let mortgages, as typically the high street steers away from this unequivocally specialist area of lending. There are some who do, and as with high street lending in other areas, high street commercial mortgages tend to be very competitive interest rates but come with stricter lending criteria.

We also work with a wide range of specialist and challenger banks in the commercial mortgage space, who offer highly beneficial and flexible criteria to accommodate a broad range of applications.

Bridging loan lenders

There is a common misconception that all bridging loan lenders will accept a property you will live in as security. This is not the case.

At Commercial Trust our focus is working just with lenders where the property you are borrowing against is not and will not become your home.

That means the bridging loan lenders we work with will only accept an application if:

1. You are buying property to do up and sell, or let out (whether that is a home or a business premises)
2. You are buying a business property to operate your own company from
3. You are renovating a property to sell on, or let out
4. You are renovating a business property to operate your own company from

How does your relationship with lenders benefit me?

The large number of high street, challenger banks and specialist mortgage lenders that Commercial Trust works with means you get access to the most competitive deals in the market for your needs and circumstances. 

If you go direct to a lender you are unlikely to find the most cost effective product you can get, which means your monthly costs may be a lot higher than they need to be.

If you work with a mortgage broker who does not specialise in property investment, they are unlikely to have the same detailed knowledge of the lenders who can help you, and may not be able to access some lender’s products. There are specialist mortgage lenders who restrict which the brokers they deal with.

As a specialist mortgage broker we work with lenders five days a week. Their teams visits our offices and we have access to their underwriting teams. This means we have a detailed knowledge of the nuance of each lenders criteria, turnaround times and working processes. This means that we can share with you how we can meet your objectives when we recommend a product to you.

What’s more we get advance notice of products being withdrawn from the market and being launched, and we get access to preferential interest rates that you will not be able to access through other brokers or direct from a lender.

For example:

Are you looking for a fast turnaround time? We can tell you which lenders have the quickest underwriting procedures to help hit your completion deadline – we can raise money in 48 hours in some instances.

Have you been turned down elsewhere because of your age? We can look at lenders who have no age limit or generous age restrictions to see if you match their criteria.

Have you had problems with poor credit in the past? We can identify lenders whose criteria are sympathetic to your circumstances.

Are you having trouble meeting mortgage affordability calculations? If the rent your property attracts means you have struggled to get a mortgage, we may be able to help. Some products are better suited to this situation, and some lenders will assess other income in the calculation, allowing you to borrow the amount you need.

Are you borrowing against a specialist property type? A holiday let, house of multiple occupation, commercial property or land to building property for sale or let are all specialist property types we can help with. In essence, any property not intended to be your home (although we can help you borrow against your home if you are raising money for your business).

Are you investing via a limited company? This is commonplace to us but won’t be to all mortgage brokers.

Are you refinancing an entire portfolio? We can review your portfolio for free, it can include a mix of property types and we can help you meet any objectives you set out.

These examples are far from exhaustive, so whatever your requirement get in touch if you are ready to apply. Even if you have been turned down by a mortgage lender in the past, we may be able to help. 

This is because not all brokers are able to work with as many lenders as Commercial Trust can, or they may not be as familiar with the available options in the marketplace as we are – we dedicate all our resources to finding solutions for all sorts of requirements, even the most complex within the landlord finance niche.

Finding the right specialist mortgage lender for you

If you are a landlord or property investor with an offer agreed on a property and you need help finding property finance, call our team to speak directly with an expert immediately. You do not have to wait to get an application underway, we can get you started straight away during our office hours.

Call on our freephone number above, or enquire online.