plym77 Posted January 9, 2007 Report Share Posted January 9, 2007 Hi all Does anyone know how this is generally done, for example, I know that if you have a couple that are applying for a normal home mortgage then it is usually their income (less loans etc) at a multiplier of X, but what about if you have only a BTL and wish to purchase a property? I own a BTL (in my name only) and have been renting until I got to know the area. I am now looking to buy with my partner and was wondering how mortgage companies would work out what they would lend? We are both employed with cash for deposits (between 5 and 10%) and no debt (other than my BTL mortgage) My BTL is approximately 80% mortgaged, but the rent doesnt cover the mortgage entirely (I have it on a repayment mortgage and cap plus interest leaves me about £100 down per month - the property is more of a long term interest due to developments in the area and so the loss of £100 is not an issue for me). Does anyone know broadly how a mortgage offer would be worked out please? Also, any recommendations of mortgage lenders who can 'deal' with this sort of scenario favouably would be much appreciated. Many thanks Sherena Link to comment Share on other sites More sharing options...
Matthew Posted January 10, 2007 Report Share Posted January 10, 2007 Hi Sherena, I have recently done this and the profits would be added to your salary and any loan payments taken away, e.g. Both Salaries £40,000 Rental Profits £10,000 Loan Repayments -£3,000 Total income £47,000 The £50K would then be used with the banks individual multiplier. So in your case, your salary would be reduced. For info Royal Bank of Scotland tend to offer the largest multiples for couples. Hope this helps, Mat. "The £47K would be used as the multiplier" Link to comment Share on other sites More sharing options...
plym77 Posted January 10, 2007 Author Report Share Posted January 10, 2007 Hi Matt Thanks for the response - it is very helpful So to clarify, they would take the whole repayment, rather than just the interest payable into account? ie. Interest Repayment say £400, Capital Repayment say £100, ie. £500 into account? Incidentally, what sort of multipliers to Bank of Scotland use? I noticed that Alliance and Leicester have some good deals on interest rates, does anyone know what sort of multipliers they offer? Thanks again Sherena Link to comment Share on other sites More sharing options...
Melboy Posted January 10, 2007 Report Share Posted January 10, 2007 Sherena......my Daughter had a "complicated" requirement for a mortgage on another property which was to be her main residence and fortunately she found a really good independent mortgage advisor and according to my Daughter he was great in fixing her up with a good deal. Steer clear of the EA's though, my Daughter went to 2 in house mortgage advisors and she knew more about mortgages then they did! Mel. Link to comment Share on other sites More sharing options...
plym77 Posted January 10, 2007 Author Report Share Posted January 10, 2007 Thanks Melboy Did your daughters IFA charge a fee, or just receive commission on the mortgage (I dont really want to be spending lots on IFAs at this stage, although I know most operate on commission), wondered if you had the contact details for him at all? Thanks again Sherena Link to comment Share on other sites More sharing options...
Matthew Posted January 10, 2007 Report Share Posted January 10, 2007 My message got confusing as I tried to edit it, should read: Both Salaries £40,000 Rental Profits £10,000 Loan Repayments -£3,000 Total income £47,000 The £47K would then be used with the banks individual multiplier as loan repayments reduce income. In my experience they would take the whole repayment into account as you are commited to making that payment, as with my £20K loan a big chunk is repayment, but they take the whole repayment off my earnings. RBS offered us 5 times our joint salary, but the rate was not as good as others. I've used about 4 IFAs in my time and all have charged me nothing and get paid by the lender a percentage of the loan. They usually make about £500 for a £100K mortgage. Definately ensure that the FA is independant otherwise you have got much less lenders to choose from and they will only use the lenders who pay them well. Link to comment Share on other sites More sharing options...
plym77 Posted January 10, 2007 Author Report Share Posted January 10, 2007 thanks for the info Mat - it is very useful! Link to comment Share on other sites More sharing options...
Independent Adviser Posted January 23, 2007 Report Share Posted January 23, 2007 I would be happy to help if you have not sorted this already. There are many things to take in to account I have a filter system that will source the most appropriate. I will not charge and happy just to aim you to the correct lender or deal with it for you. PM If you would like further advice Best Ken Davies Link to comment Share on other sites More sharing options...
plym77 Posted January 23, 2007 Author Report Share Posted January 23, 2007 Hi Ken Thank you vey much for the offer, but we have a family friend who is an IFA who is now looking at this for us. Thanks anyway Regards Sherena Link to comment Share on other sites More sharing options...
plym77 Posted January 26, 2007 Author Report Share Posted January 26, 2007 this is proving more difficult than we first thought rediculously what seems to be happening is most mainstream lenders seem to be expecting the rental income to cover 125% of the mortgage (including repayment, not just interest) - with no room for 'human evaluation' - irrespective of the fact that we can cover both mortgages. A bunch of button pushers ticking boxes and not really thinking about the issue!! We have an 'in principal' acceptance from a company, but what they seem to be suggesting is income should cover the two mortgages without taking into account the rental income - is this right?? We can just about do it by the time we take into account utilities, food, life insurance, mobiles, car expenses etc, but what I dont know is what they actually take into account in calculating the figures - ie, are they saying, net income must cover only the mortgages or will they estimate utilities and everything else before they finally agree? My concern with the latter is that they will over estimate our costs of living!! Does anyone have any experience of this? and whether any lenders in particular give a more favourable view to those of us who actually want to invest in the future?!?... please feel free to name drop! I wouldnt enter into an arrangement that I couldnt uphold and in figures we could cover everything if the rent didnt come in. the stress of buying.... why do we cause ourselves these headaches!! Thanks again Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted March 20, 2007 Report Share Posted March 20, 2007 Hi Sharena THINK OUT OF THE BOX Don't know if this is still relevant for you but it probably will be for lots of other people in same position - but i cannot believe no has suggested that you look at getting a self certified mortgage !! preferably an offset " virgin one " type -most lenders have them but dont promote them too heavily. You will probably have to prove you earn a min of approx £15000 and that is it - they are not interested in your buy to let or any other financial info you will have to put a larger deposit - was 10%when i did mine and the rate is not so good - If i tried to do it your way i would have an insurmountable problem i have 30 btl with mortgage borrowings of nearly £3.5 million -now if my income is supposed to cover that lot and my personal mortgage without taking rent into account then that would be me finished !!! My partner does not work i have 2 kids preschool and an 11 year old -so just my income to cover it !!! not realsistic at all Fact is the year i took the mortgage my books showed around £18000 net profit(self employed) and i walked away with a mortgage of £320,000 AT 85% LTV Offset mortgages are essential to people like us as; they work just like a bank account - permenantly overdrawn with the o/d limit set by 85-95% of your property value and like a bank account you can withdraw and pay in with a checkbook/paying in book ( these come with the mortgage!- you can even withdraw paying with internet bank transfers- as mnay times and as often as you like!) The interest rate is not the best - I took a deal which is interest only fixed at 1% above boe for the life of the loan which is not bad + interest is calculated daily - and only on the balance you owe that day. This gives massive fleibility at all levels as any spare cash i have doesn't go into "internet high interest accounts" 5.3% ish i believe at present, or even ISA's ( what a con they are !!!) your 5.3 will get taxed down by 22% or for 40% so barely keeping up with inflation - your Isa will do a little better - NOPE put it in your offset acc - and get a whopping 6.5 %(or what ever rate your mortgage is running at)on it (plus you can compound this up to work out the savings you make as you wont be paying interset on this particular bit for the rest of the mortgage term- too complex for here !) also our friend Mr Brown has not come up with a way to tax a mortgage payment yet -so no tax - and you are not limited to 3k as you are with a cash ISA Cant see why any one would do it any other way - I currently have just over £100,000 on 0% credit cards sat in my mortgage acc saving me an absolute fortune in interest (6,500pa thanks Mr Credit card!)see below. If raising a bigger deposit is an issue for anyone then do what most of my aquaintances have done - become a professional credit card "tart" Start applying for all those 0% deals that come thr your door every day instead of throwing them in the bin - i have maintained a balance in excess of £100,000 (accross several- well actually lots of cards!) for nearly 5 years -NEVER PAYING A PENNY IN INTEREST !! it should be said at this point that this is not for idiots - you need to be disiplined and organised and RESPONSIBLE to play this game(it is a big boy game with big boy rules and if you break those rules you are going to feel some big boy pain!!!) - but by doing this and various other lateral moves in 6 years came from being £22,000 in debt to sitting on a £5million portfolio!!! so yes it does work !!( A LOT OF MY FRIENDS HAVE ALSO DONE THE SAME) I hope any one reading this can at least use some of it to improve their lifestyle in some way if not change your life entirely !! I used it to move from staying with my girlfriend in a council flat to moving into a 4 bed detached with 1/4 acre -and with large annex containing indoor pool, jacuzzi, sauna and bar. No boasting - hopefully inspiration to any one who feels trapped with conventional approaches blocking their every move - THINK OUT OF THE BOX -there is always another way . Simon Link to comment Share on other sites More sharing options...
plym77 Posted March 21, 2007 Author Report Share Posted March 21, 2007 Hi Simon Thanks for the info, we did sort it, it just amazed me at the time that some of these big lenders are so tunnel-visioned! However, we did manage to sort it - and complete on Friday! However the information you have provided is very informative and i am sure someone else will be able to put it to good use - thanks again Regards Sherena Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.