Guide to BTL remortgaging in 2021: The impact of coronavirus

Jonathan Stinton is head of intermediary relationships at Coventry for intermediaries

Hundreds of thousands of fixed-rate products are set to mature in 2021, including a wave of buy-to-let (BTL) mortgages. As a result, landlord clients – from so-called ‘dinner party’ investors to professional landlords with larger portfolios – are considering what financing options are viable for them.

The impact of coronavirus on both landlords and tenants has been wide-ranging. Thousands of tenants across the UK have seen their circumstances changed by the pandemic. Many of these renters have been placed on furlough or have had to take a mortgage payment holidays for instance. Yet, the crisis has also had an impact on landlords too. With tenants deferring rental payments some landlords have suffered a loss of income. Others have been furloughed themselves or have had to defer mortgage repayments too.

Inner London property sales on the decline since March 2020

Landlords are clearly no exception then and, in the weeks and months ahead, intermediaries will face the challenge of helping their BTL customers to secure the right products. The impact of the crisis on the landlord’s individual circumstances will undoubtedly play a role in the types of options available to borrowers when it comes to remortgaging their portfolios.

In a series of articles, I will answer some of the key questions that intermediaries might expect from their landlord clients.

FAQ No. 1: “Will I still be able to remortgage if I have been on furlough during coronavirus, or if I deferred my mortgage payments?”

Intermediaries will be well aware that lenders are likely to take furlough and payment holidays into account when reviewing applications. The economic strain of the pandemic has placed 9.9 million people on furlough, and at the height of the crisis, one in six mortgages were subject to a payment holiday.

Buy-to-let clients are not exempt. Just like other borrowers, landlords too may have been financially impacted by the crisis or been furloughed and these customers will want to know what their options are when it comes to remortgaging.

Lenders are taking a pragmatic and responsible view about furlough and many are still willing to support those who were placed on the government’s Coronavirus Job Retention Scheme. For example, at Coventry for intermediaries, we will consider applications from borrowers who were furloughed last year and who have now returned to work.

A number of BTL landlords also chose to defer their mortgage payments last year. Indeed, according to UK Finance about 70% of people who have taken a payment holiday did not need to take one for financial reasons.

Some of these borrowers could be worrying about the impact their historic decision to take a payment holiday could have now on their ability to remortgage. Under the government’s programme, mortgage payment holidays should not affect a borrower’s credit score, especially if they’ve already returned to repaying their remortgage (89% of borrowers had done so by November last year). Your guidance and knowledge of the market as an intermediary will have a critical role to play to tackle these misperceptions.

It’s only natural that customers who were furloughed or have taken payment holidays will feel hesitant about how difficult it might be to remortgage this year. Criteria is changing all the time and it’s often hard to keep up. As lenders, we need to be as transparent as possible with lending criteria, but we also need to work together with you as intermediaries to show borrowers that even if they were directly impacted by the Coronavirus crisis last year, they still have options when it comes to remortgaging.