Specialist lender Dilosk challenges banks on buy-to-let mortgages
A SPECIALIST lender is to offer buy-to-let investors the option of interest-only repayments for up to 10 years.
Dilosk says it has up to €200m to lend to individual property investors and companies. The lender is marketing its products as ICS Mortgages. It bought a portfolio of 2,000 ICS Irish home loans from Bank of Ireland in 2014.
The chief executive of Dilosk, Fergal McGrath, said it was offering competitive interest rates from 4.49pc.
The move from Dilosk is expected to create competitive pressure on mainstream lenders such as AIB, Bank of Ireland, Ulster Bank, KBC Bank and Permanent TSB.
The formal launch of the new buy-to-let products comes after it was revealed that 32 credit unions are gearing up to loan out around €400m in residential mortgages this year.
The Dilosk/ICS move is the first product it has offered since entering the market by acquiring ICS Mortgages and its loan book of €223m from Bank of Ireland in September 2014.
Dublin-based Dilosk - which is licensed by the Central Bank as a retail credit firm - has been offering top-up mortgages to the ICS residential mortgage holders, whose loans it took over from Bank of Ireland.
Mr McGrath said a trial of the buy-to-let product had been well received by the market.
He said the chronic shortage of rental properties should create demand for the product.
"There is significant demand in the market for a new competitive buy-to-let mortgage proposition to cater for the increasing demand for good quality rental accommodation in Ireland," he said.
Mr McGrath said a lack of access to mortgage finance for buy-to-let investors had been one element of the complex housing situation in Ireland.
The latest figures from Daft.ie shows the number of properties available to rent nationally fell below 4,000 last year, from a peak of 27,000 back in 2009.
"A new stream of finance can play a positive part for the long-term provision of affordable and quality accommodation solutions to meet the various needs of a range of tenants," Mr McGrath said.
Under Central Bank lending rules, property investors need a deposit of 30pc to get a mortgage.
Asked about the 10-year, interest-only, mortgage option Mr McGrath said it would not be for those with only one investment property.
Dilosk would only issue buy-to-let mortgages on the basis that the rental income covered the mortgage payments, and not on the basis that high-income individuals would be able to subsidise the mortgage repayments from their income.
Mr McGrath said there were no immediate plans for the lender to enter the residential mortgage market, but it was something that was under consideration.
"The family home market is well served by the banks. We are concentrating on buy-to-lets at the moment," he said.
The entry to the mortgage market of Dilosk has been long awaited.
Another lender, Frank Money, also has plans to enter the residential mortgage market, but has yet to receive authorisation from the Central Bank.
In the meantime, credit unions are expected to target first-time buyers, trader uppers and those looking to acquire properties in tenant purchase and affordable housing schemes.