Buy to Let Mortgage Survey question

Metermaid

We are currently trying to save our purchase as our sale has fallen through. The house we're selling is empty as were renting in another part of the country. We've just sent off mortgage application to Northern Rock who I understand will do the survey within the next week.

Is it a different type of survey for 'buy to let?' - I take it they will take both house value and rental value into consideration? We have quite alot of equity in the house, but we are just on the border of being able to borrow enough with them for finance the sale. Will they need to feel that the rent will cover all of the repayments? And do they take into consideration how 'rentable' the house is? - It's a modern detached 4 bed so I know it's not going to be as easy to rent as a smaller property (we aren't intending to actually put tenants in)

I am very twitchy about the whole thing, and would be grateful for any info anyone has.

Many thanks

herbiesjp

How much do you want to borrow and what is the expected rental income on the property?

HAve you gone via a broker who would check the figures out for you beforehand?

Metermaid

Yep, have used a broker who has checked figures - she says she's pretty sure will be ok but can't be positive. House is valued at £235,500, we want to borrow £209,000. Rental income expected is around £850 according to local lettings agent. Repayments on mortgage would be £1,059. Our income is £42,000 with £300 going out on unsecured loans.

Metermaid

Oooh....any also borrowing £48,000 interest only which was initially the only mortgage we needed for purchase so have that offer in place already

herbiesjp

Based on the figures given 209k against 235k you are borrowing 88.9%

Northern rock go up to 87% though

Also according to their criteria you would need £957.92 pm rental income to cover a loan of £209k


I would have a word with your broker before they waste your valuation fee

Metermaid

I have gone back and checked paperwork and broker has put a valuation of 240K on property (it's on market at £235,500, we sold at this price and also had a later offer of 241,000), she's also asked for £208,800 not 209K which is exactly 87%. When we originally had lettings agent round about 4mths ago they said £950 pm, I rang them yesterday and they said we could ask that but as so many currently up for rent if we wanted to rent quickly it would be sensible to ask for £850 per calendar month.

So, I take it that it pretty much hangs in the balance as to what figures the surveyor comes up with? Do you think it's still worth trying?

herbiesjp

I personally think the figures look very tight, and it will be up to the surveyor and what comparables he come sback with for the property price and rental income.

I think it may well be the rental income that could let you down here.

You have to be fully aware of the risks of this and what the consequences might be.

Rather than look at changing it to buy to let - have you looked at the option of getting consent to let from your current lender and then getting a let to buy from your new mortgage provider?

Are you raising extra funds with the re-mortgage? If so, is this totally essential?

Metermaid

Oh gosh - if I was jittery before, it's not getting any better now! - We currently have 30K mortage on the house with the Halifax, this was to be paid off with the 208,800 from N.Rock - the balance, less £2,240 for stamp duty was to make up the purchase price of new property (224K). We have offer of 60K from Halifax on new house although we were only going to take up 48K of this - would it increase the chances of getting the NR mortgage if we took up the 60K and therefore asked for 12K less from NR - could you tell me what rental income they would then look for?

Thanks so much for your input