A new lender has launched in the buy-to-let space, ditching the traditional loan-to-value (LTV) method of mortgage finance.

Instead, the new “productless” property lender, Octane Capital, says it will price each individual loan according to the “real” risk of the borrower assessed by their underwriters.

Octane Capital says it will provide bridging finance as well as buy-to-let loans for up to three years on properties worth a minimum of £100,000.

It will consider buy-to-let loans for individual landlords and companies, and the rental income will need to cover 100% of the pay rate.

The business has been started by the founders behind Dragonfly Property Finance.

Applications will be considered based on the strength of the borrower, quality of the asset and how the loan will be repaid.

Credit checks will be conducted, but unlike many lenders, Octane Capital won’t just rely on credit scores to make a lending decision.

Mark Posniak, managing director of Octane Capital, told EYE that most business would come through mortgage brokers and says decisions could be made quickly as long as there was enough borrower information.

He said: “I don’t need a computer to tell me if someone is a good or bad risk.

“Just because someone has a missed a mobile phone bill payment, that doesn’t make them a bad risk.

“We will look at deals holistically.”

Jonathan Samuels, chief executive of Octane Capital, added: “LTV clearly has a role to play for any lender, including ourselves, during the assessment of risk.

“But in our industry we believe there is a huge over-reliance on it that can work against lenders and borrowers alike. Charging someone X% if they have a 30% deposit and Y% if they provide a 40% deposit is often misguided, as the borrower with the smaller deposit can be less of a risk once you drill down into the detail.

“As a result, we’ve decided to launch without a set product sheet with a list of rates based on loan to value. Instead, each loan will be priced according to its level of risk.

“This new blank canvas approach has left some people scratching their heads, but for us it’s a far more sensible way to offer loans.”