'Buy-to-let is in our DNA and we pride ourselves in our ability to evolve'
This article was created in partnership with Paragon Bank.
When it comes to buy-to-let mortgages for landlords, success lies in ease of process -especially where multiple properties are involved. At Paragon Bank, they saw a huge gap in the market here and responded by developing a system which allows landlords to streamline their application journey for up to 15 properties.
Speaking to Mortgage Introducer, Jason Wilde, Head of Mortgage Sales at the specialist lender, explained it’s something of a gamechanger.
“It will completely change the journey for the intermediary, from application right the way through to post-completion. Using APIs and smart data capture, the system is significantly more efficient, reducing document demands, particularly for smaller landlords who wish to expand their portfolios.
“Intermediaries will notice a big difference for landlords with up to 15 properties. Our new system provides the underwriter with confidence ratings based upon credit score and various other factors. It's expected that around 70% of these qualifying applications will move through to mortgage offer with minimal documentation - which is proving to be a real gamechanger.”
The new faster and easier buy-to-let mortgage application process is suitable for;
• Individual and limited company landlords with a portfolio of up to 15 properties
• Single self-contained properties
• Up to 75% LTV
• Up to £2 million exposure with Paragon
‘It’s in our DNA’
But this sort of specialist approach isn’t new for Paragon – the need to evolve and adapt with the market is at the core of everything the lender does.
“Buy-to-let is in our DNA and we pride ourselves in our ability to evolve,” added Louisa Sedgwick, Managing Director of Mortgages at Paragon Bank. “We are known as specialists in complex buy-to-let and we continue to excel in those more specialist propositions, but we are also here to support landlords with smaller portfolios or more simple requirements.
“The launch of our mortgage origination system earlier this year has enabled us to implement a fresh approach and tailor our application process for specific customer groups. Landlords with smaller portfolios and simpler buy-to-let propositions require a more straightforward application and underwriting approach, so that is why we have streamlined and simplified the journey for landlords with 15 properties or under on single self-contained properties.”
This shift was made in direct response to market demand, with competition in the specialist space heating up. Whilst Paragon has built a reputation for finding solutions for some of the more complex businesses, the recently upgraded application systems and process enhancements mean that placing straightforward business with them is much more swift and simple. At its core, this new process is helping Paragon to support newer landlords and those who want to grow their smaller portfolios.
“We need to make sure that we’re fully understanding a landlord’s portfolio now as well as what they’re looking at doing in the future,” added Wilde.
A history of helping
Paragon is known for their innovative and forward-thinking approach to lending – taking a curative rather than preventative view when it comes to solving market challenges. And it’s something that’s been with the bank since its very beginnings.
“Paragon [was] one of the original pioneers of buy-to-let and we actually wrote our first mortgage specifically for landlords in 1995, a year before the term was coined,” Wilde revealed. “We were one of a very, very small handful of lenders that were lending to limited companies then. And it was very specialist.”
Back in 2007, Wilde recalls limited company lending as a rarity. As he told Mortgage Introducer, his team would speak to brokers and noted that they “didn’t really get any limited company enquiries”. Instead, the space was reserved for larger, well-established portfolio landlords - and first-time landlords almost always borrowed in their personal names. But that’s no longer the case.
“The sector has evolved - there’s been a huge impact in regard to tax changes, namely Section 24 which saw the removal of mortgage interest tax relief” added Wilde. “That’s seen a big drive towards limited company lending because it can be more tax efficient for borrowers.”
This is primarily due to limited companies not being subject to Section 24, giving them the ability to offset mortgage interest, in addition to being liable for corporation tax instead of personal income tax which is likely higher for those who fall into the higher rate bracket. As a result, more landlords are now seeking professional tax advice before making investment decisions rather than just assuming that everything should go through a personal name.
Human touch in mortgage still essential
However, as limited company lending has grown, so has its complexity. And while many lenders lean into automation, Paragon leans the other way - into human judgment.
“We manually underwrite the complex cases,” Wilde added. “While this approach is made more efficient with the technology we’ve invested in, when you’re dealing with those large portfolios it’s really important to have that human interaction too. This is why we give brokers the option of speaking to our underwriters directly.”
And for large borrowers, Paragon builds underwriting meetings directly into the application process.
“We invite the borrower and the broker to a meeting with our underwriting team. It’s not an interview per se, but I think people wrongly assume we’d be grilling them. This meeting is just to sit down and ask what have you done? When did you start? What’s your plans now? What’s your plans in the future? [Essentially], how can we help?”
At the crux of it, it’s this tailored, contextual approach which Wilde believes is essential to success moving forward.
“Paragon is not a lender that looks at the background portfolio and [makes assumptions]. Often there’ll be one or multiple properties that have been refurbished or converted through to HMOs – [as such], they may be empty at the moment, not producing rent, but with the potential to be shrewd investments in future. From there, it’s about assessing what the plans are with these properties going forward.”
