The revamp aims to release funds sooner
Paragon Bank is streamlining the application process for its buy-to-let mortgage further advance offering to issue offers and funds sooner, following feedback from brokers. It is also reducing the minimum loan size to £2,000 and has cut rates by 20bps.
Further advances will be migrated onto the company’s enhanced mortgage originations platform, already in use for its other buy-to-let mortgage applications.
If no property inspection is required, it will enable Paragon to issue offers in as little as 48 hours, allowing landlords to receive funds within 24 hours of the lender receiving a signed offer acceptance.
Automated valuation models
The new process will use automated valuation models alongside other data sources to reduce the requirement for in-person revaluations, as well as incorporating trusted new and existing data sources to help indicate how much additional borrowing a landlord can access.
In most cases Paragon expects to be able to provide this indication, but if that isn’t possible landlords can submit an application to be assessed on a case-by-case basis by its underwriters.
The 20bps cut on its further advance products mean that rates now start at 6.25% for five-year fixed-rate mortgages, available at up to 75% loan-to-value (LTV) for single self-contained (SSC) properties. Two-year fixes are also available, with rates starting at 6.40%. Equivalent products are available for HMOs and MUBs, priced 20bps higher than the SSC loans.
Paragon believes that demand for further advance loans will increase, particularly due to the increased minimum EPC requirements for rental property by 2030. According to Paragon, around 40% of its further advance loans fund property improvement work.
Research carried out by Pegasus Insights for Paragon suggests that 62% of landlords expect to carry out property upgrade work to meet the minimum EPC C requirement by October 2030, 22% of whom expect to use external finance to fund the work, including further advances.
Andrew Smart, head of mortgages transformation at Paragon Bank, said: “We’ve moved our further advance proposition onto our enhanced origination platform, with brokers benefiting from the same ease of use, clear and easy layout and intuitive design. This makes the process simpler for brokers and their landlord clients, providing quicker release of funds where we don’t need to inspect the property.
“A substantial proportion of the further advance business we write supports home providers to improve their properties. Making this finance quicker and easier to access will be particularly beneficial for those investing to remain compliant with new regulations, such as the forthcoming changes to the PRS Minimum Energy Efficiency Standards.”
