Top five reasons for choosing a lender

top 5 reasons for choosing a lenderWhen it comes to finances it can be daunting to work out which lender you should put your faith in to ensure you get the best value for money and that all your needs are covered.

With so many buy-to-let (BTL) mortgage products to choose from, where do you start? Our latest research* looks at the top five reasons why landlords choose to use a particular lender.

5.   It’s all about the money

At the lower end of the scale, but still important, 20 per cent chose their lender because they offered the lowest arrangement or product fee. Good financial planning can mean the difference between a successful letting business and financial difficulty, so being prudent from the beginning is a good place to start.

4.   I can give you what you want

Nearly a quarter (24 per cent) of landlords were swayed by the specific criteria used by their current lender.  Landlords have specific requirements, and it’s no wonder that this makes it into the top five when almost six in ten (58 per cent) landlords say that lenders don’t consider their individual circumstances.

3.   Déjà vu

Whether it is because they have a bank account or previous residential or BTL mortgages, an existing relationship is enough for 25 per cent of landlords to go back to a lender they’ve used before. Landlords seem to be creatures of habit when it comes to choosing a lender and it just goes to show that good service breeds repeat business.

2.   Get low

Nearly a third (31 per cent) chose their lender because it offered the lowest interest rate, which when doing overall calculations including fees and other costs, is high up on the list of top five reasons and is one of the most important aspects when sourcing new loans. But it doesn’t make the number one spot…

1.   Somebody told me

… The top reason cited by landlords when choosing a lender – at 42 per cent – is because they were advised by an intermediary.  It is not surprising to see so many landlords using a particular lender for this reason when previous NLA research shows that as many as seven in 10 say they rely on brokers or intermediaries to find them the best deal.

Have you got the lender know how?

It is plain to see that value for money and an existing relationship is what most landlords rely on when choosing a lender.

If you don’t trust yourself to make an informed decision then using a broker or intermediary is good way to start. However if you like to do the legwork yourself make sure you check out the deals offered by NLA Mortgages. NLA Mortgages provides a free online buy-to-let mortgage search facility to help you find the best suited product for you, sourcing from over 600 mortgage products including offers that are not available in the general marketplace.

*NLA Quarterly Landlords Panel research – Q1 2015 (1,070 respondents)

3 thoughts on “Top five reasons for choosing a lender

  1. I would have expected No4 to be top of the list. IMO, the absolute first question to ask is “does this product do what’s needed ?” For example, if you need to borrow at 70% LTV then it’s no good looking at products that stop at 60%; and if you are “getting on a bit” then it’s no use looking at products where they won’t lend to people your age – but NLA Mortgages don’t seem to allow these as selection criteria.
    Another one is where the lender needs a personal income (from non-letting employment) which is higher than you earn. A lot do this (at varying levels), but again there is no filter for this.

    This makes it really unnecessarily tedious working through a looooooong list of potential products working out which are from lenders you can’t use, or have other restrictions that make it unsuitable. As someone who might potentially be looking to raise capital for another purchase before too long, I’ve been looking at what’s available and it’s been a frustrating experience.

    IMO, all other considerations come after that – it’s no good finding a name you trust, with fees and rates you like – if you don’t meet their lending criteria.

    1. Hi Simon

      Thank you for your comments. You do raise some valid points.

      In regards to NLA Mortgages selection criteria, NLA Mortgages deliberately show all products available at all LTV bands but make it clear which schemes fit and which do not by the colour. Acceptable LTVs are shown in blue and unacceptable in red – also, where schemes do not fit, they show how much additional deposit would be needed to make the scheme acceptable. This approach has been very positively received by their landlords and brokers. Details of the lenders minimum/maximum age requirements and minimum/maximum loan terms are shown within the ‘Details’ section of each Quotation.

      NLA Mortgages do not have the facility to capture ‘personal income’ details within the system because currently there is only one lender in the entire market that will take personal income into account, which is Woolwich.

      If you feel like you aren’t getting the information you are looking for, please contact the NLA Mortgages Telephone Helpline where mortgage specialists will be able to answer any queries that you might have and will help guide you to the most suitable lenders for your needs.

      1. Your comments do not take into account …
        If I need to borrow a certain amount, such as remortgaging to purchase another property, then I can easily work out how much a specific LTV would be – it is of no use whatsoever showing me products with a lower LTV, if I were interested in them then I’d put a lower value in the load required field. For example, I’ve just put some example figures in, and for trackers alone there are 8 pages, and on the first page only 3 of the 20 products have an LTV of 70% or more.
        This really needs a “don’t show me products with a lower LTV” selector.

        And then the one I’ve been complaining about since I first (tried) using the site – the “Details” button is not a link. I want to be able to open the details page in a new tab (right click, Open in new tab), and if the product is not suitable just close the tab and be back where I was – not have to reset my search because I forgot to use “back” instead of closing the current tab.
        This “feature” alone makes the site “a right PITA to use”.

        These two are not “advanced” requirements, they are really really really basic fails. Fix those and I can probably live with the rest !

        Other features that would be useful would be to be able to set a list of lenders to include or not include (and remember that list). If a vendor’s lending criteria don’t suit me, then there’s no point including them – but I don’t want to have to work down the list one by one to see what the others have to offer.

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