Further borrowing against C&G BTL mortgage

MrMauled

Hi I have a C&G btl mortgage on a seven year fix. It has just under two years to run. When I took it out I was working hard (I am self-employed) and my earnings and projected rental easily supported it.
I would like to buy another btl property yielding more than 10% and to borrow further from C&G on this property to fund the deposit. C&G has told me that they will lend me further funds based on the valuation today, but I also need a personal income of £35,000 in addition to my rental income.
Over the years the rental on my properties has grown so that I have taken it easy and my non-rental income has fallen below £35,000.
Does anyone know if I have any chance of being approved for a further loan against this property with C&G.
I don't want to pay the 2% early redemption penalty. Also maybe no lender would look at me now because of my drop in income? although the rents bring in at least 250% of the fixed interest.
Please do any members have any advice? Thanks.

socrates

Ok - firstly trying to find properties in excess of 10% yield - there are cash buyers way ahead of you on this one, while you are trying to raise funds they are buying them and moving onto the next one.

Secondly we need more figures, some of the numbers so far do not stack up

Are you borrowing against the BTL property (I would be very interested if C&G are actually prepared to do this income or no income) - whats the LTV, rent etc. What rate did C&G offer you and the arrangement fee?

Some lenders will ignore the rental properties IF they are self supporting and you say they are.

You might want to extend the length of your current mortgage - thus freeing up cash flow and in turn increasing your income.

You say will give you money on the property and then you as if they will give you money.

A bit confused - so give us so more info

MrMauled

Thanks socrates. Been turned down now by C&G. They initially said application looked good and then blew me out on further borrowing on BTL. They wouldn't tell me why. Any ideas?
The rent is 3x monthly interest and there is plenty of equity even at 75%.
They initially suggested 2 year fix at 5.29% with 2.5% arrangement fee lending 75%. But quickly changed their minds although they said my credit score was good. Anyone any idea why they rejected this wonderful lending opportunity?
Might be because although I have 2 BTL's I live with my partner in her house?
any views greatly apprciated.

silvercar

Anyone any idea why they rejected this wonderful lending opportunity?

'Cos you didn't have the income?

As the credit crunch bites they want to know that you can pay the mortgage if a tenant falls behind with the rent, so they may be being cautious with your income level.

I know some lenders used to insist that they would only lend to home owners (even with a mortgage), so maybe the fact you haven't got your own home makes them jittery. They seem to think you could escape to another country if you don't own a home here.

If you don't want to pay the 2% penalty you are stuck. If the LTV is below 65% you could try the Coventry.

Trollfever

They initially said application looked good and then blew me out on further borrowing on BTL. They wouldn't tell me why. Any ideas?

I would guess that Lloyds Banking Group has decided that it has more than enough BTL borrowing on its books.

.

_Andy_

MrMauled wrote: »

C&G has told me that they will lend me further funds based on the valuation today, but I also need a personal income of £35,000 in addition to my rental income.
Over the years the rental on my properties has grown so that I have taken it easy and my non-rental income has fallen below £35,000.
Does anyone know if I have any chance of being approved for a further loan against this property with C&G.

You've answered your own question there.

MrMauled

How do you mean Andy?

Because I live with my partner in her house? I guess I have an equitable interest in it as I pay half of everything. Do lenders want to know that you live in your own house as well as having btl investment properties?

Cheers

_Andy_

What I meant was that you've basically said "C&Gs policy is X. I don't meet X and they've declined me. Why?" - Which to me seemed a bit obvious. (Not having a go, I just didn't get what your query was).

The reason they have the policy about income is to mitigate risk. I.e. if your entire income was from BTL rental income, you'd be in a bit of a situation if you lost both sets of tenants.
If you have X amount of income from work or other sources, this means you could potentially service the mortgage from your own pocket.

getmore4less

You want to raise some money for a deposit

I would look at other lenders if they have lower fees than the 2.25 fee that will mitigate the 2% penalty and even with the penalty and a full 2.25 fee if your yield is 10%, you are still well covered and have it paid within a couple of years.

What about the place you live in can you raise some on that perhaps being on that mortgage may help.

The other option is to get more work so you go over £35k(to try again) and start saving for the next one there will be plenty of time to buy another place, prices arn't going back up any time soon.

MrMauled

Excellent points. Seems that the only fixed 5 year btl rates carry these substantial arrangement fees. Would be a load of hassle having to apply for two mortgages and redeem the perfectly good existing one, but looks like I might have to.
I looked at secured loans but these have to be for at least 5 years and I can remortgage the existing property without penalty in less than two. Also I was told that they would only lend (not sure which finance companies!) up to 60% on btl property, so that wouldn't raise enough anyway, and cost something like 12%! Now that IS a non-runner!
Many thanks