Ross Turrell

Taking a UTB approach to BTL

Barry Luhmann

head of BTL – mortgages, United Trust Bank

Interest rates are increasing, there are more demanding EPC requirements coming down the tracks, and landlords’ yields are being squeezed by the cost-ofliving crisis. It doesn’t sound like the ideal time for a lender to launch into the BTL market. But then, United Trust Bank (UTB) has never played the short game at anything.

When UTB dipped its first toe into the mortgage market’s waters, it was because the team believed it could deliver a unique second-charge proposition to borrowers who were being sidelined by mainstream lenders. This sizeable underserved market presented a great opportunity to UTB and the many brokers who, at that point, had to let perfectly good customers go because criteria just wouldn’t flex enough to fit them in. That was 2015, and if you’ve had anything to do with seconds in the last seven years, you’ll know that UTB’s toe made quite a big wave and prompted us to add a range of first-charge mortgage options to the suite.

We began testing our BTL proposition and processes in April this year with a small number of broker partners who had given feedback during the research phase. By the beginning of May we had increased the number of intermediaries able to submit BTL proposals to 25, including 3mc, Positive Lending, Impact Specialist Finance, TFC, Connect, and Brightstar. This gradual approach to launching has served us well in the past. We can iron out any wrinkles as the volumes steadily increase rather than opening the floodgates and risk being overwhelmed. We’re using the same slick journey and intuitive fintech tried and tested on our other mortgage products, so we know they work really well.

Ours is a fully digital, paperless process that streamlines the deal through to completion. Intermediaries start by submitting their case via a BTL portal on our website, following which a full decision in principle is produced and returned to the broker with a list of any requirements. A mandated case owner is allocated (to whom the broker can speak), and a full valuation is instructed. The borrower/s will use the UTB app to confirm loan details and complete their virtual biometric ID, and when all this is done, all being well, the loan will be approved and the offer issued online to the borrower and broker, ready for the solicitors to do their bit.

Our obsession with improving efficiency and speed with tech whilst maintaining the human touch where it adds value has had impressive results across our mortgage offering. For example, we estimate we’ve reduced our app-to-offer time by 40 per cent, shaving around 15 days off the mortgage process.

One criterion UTB has always been particularly flexible on across its mortgage product range is property and construction type, and the new BTL product suite is no different. As long as it’s a permanent structure, there isn’t much we won’t lend on – providing it values up, of course. Our funding, which largely comes from retail deposits, doesn’t carry the same restrictions as many other lenders have to adhere to, particularly if they’re using warehouse loan facilities, for example. The same applies to the customers to whom we can lend. There’s no minimum credit score requirement in our underwriting, and we believe that most borrowers with a minor financial blip on their record don’t deserve to be categorised as adverse forever. UTB has lent millions to customers many lenders wouldn’t touch, yet our loans in default are no greater than industry average. This greater flexibility and our common-sense underwriting are key differentiators for us.

We’re confident that our unique approach, great application journey, and product choice will secure us a reasonable slice of the BTL cake. We can offer loans of up to £1m at a maximum 75 per cent LTV and £500k to 80 per cent LTV to individuals and SPVs, with two- and fiveyear fixed-rate options available. There’s no minimum income requirement, and there are three competitively priced categories, depending on property complexity. The first is aimed at standard BTL properties; the second is available for more specialist BTL, such as HMOs of up to six rooms, MUBs of up to six units, and holiday lets; and the third is tailored for complex BTLs, including HMOs of up to 10 rooms, MUBs of up to 10 units above less-desirable commercial units, and properties of nonstandard construction. We think that should just about cover most borrowers in the specialist category.

Add the final pieces of the jigsaw – the experience we have on the team and our dedication to delivering outstanding service – and we think it’s a winning proposition. But I guess brokers and borrowers will ultimately be the judge of that!