Why Can't I get a mortgae (at a sensible rate)

unmissable

I cannot believe the difficulty I am having getting a mortgage.

I bought my house 11 years ago and was able to pay my mortgage off last year. (Now realise that was probably a very bad thing to do)

Because I am in the Forces I now cannot live in my house and it is very safely rented out.

I would like to raise money against my house to invest in a holiday home.

I have no other debts, a good credit rating, a huge deposit and a very good safe income. Despite several phone calls of my own, and also asking London and Country, I cannot find a lender other than a buy to let, which is of course very expensive. (With 2 1/2 % arrangement fee). I do not have a first residential mortgage, and because I am in the forces cannot live in my own home (If I did the problem would go away). Surely, I am not in the category of high risk and need to buy such an expensive product.

Can any one recommend a path to take to avoid a high BTL rate.

Mrs_Bumble

Is it a tenant or family member in the property?

unmissable

It is a tenant. They are reliable and have been in for 18 months with no indication of leaving. they are on a Assured Shorthold Tenancy which is just rolling on.

happybroker

btl is the only way forward I'm afraid.

opinions4u

unmissable wrote: »

I cannot believe the difficulty I am having getting a mortgage.

The Credit Crunch has significantly reduced the availability of mortgage funds. The banks have less to lend so they are being picky.

Because I am in the Forces I now cannot live in my house and it is very safely rented out.

The most significant losses mortgage lenders have suffered have been on sub-prime lending or for loans on properties where there is a tenant.

I would like to raise money against my house to invest in a holiday home.

Mortgages for a home that the borrower will live in are, statistically, lower risk than lending for a property that the borrower won't live in. You want to raise money on a home you don't live in to make a speculative investment. You should expect the interest rate to reflect the higher risk to the lender.

Surely, I am not in the category of high risk and need to buy such an expensive product.

Your credit profile is sound enough from what you say. The type of lending you propose is, however, higher risk.

Can any one recommend a path to take to avoid a high BTL rate.

Unless you can you raise the money against the holiday home, I'm struggling to identify an alternative.

unmissable

Thanks for the comments so far but I do not see this as high risk.

Many other house owners are taking out MASSIVE residential mortgages to fund BTL investments. Because I am in the forces and have proved my ability to pay back a mortgage, I am being discriminated against.

I am asking to borrow less that 60% of the value of my main residence. I would then own 2 properties and the mortgage would be less than 1/3 of total value.

The borrowing would be less that 2.5 times my salary, never mind my wife's salary, never mind the regular income from letting I receive.

If others can raise money aginst their main residence, why can't I?

Fortheloveofmoney

I think you've answered your own question really. Others are raising money against their main residence. You are asking to raise money against a property you don't live in so it cannot be classed as your main residence.

I think the previous poster explained the higher risk to the lender really well as have nothing to add on that.

Mrs_Bumble

You now have a property that you have a tenant in and so it is now a business proposition so the only way forward is Buy to Let.

unmissable

In the forces it is usually accepted by lenders that because of your job you cannot live in your main residence. My previous lender allowed me to continue on a residential mortgage when I was forced to move, as do many others (considering it still a main residence). What would they have me do...leave it empty a lot of the time so that I can raise money against it? or get an income from it.

Surely the risk is against my ability to pay, which is proven and sound.

Mrs_Bumble

Yes whilst they were happy for you to let the property out whilst you had your residential mortgage on it because you are in the forces, you have changed things by unfortunately paying the residential mortgage off in full, which whilst great as mortgage free etc, now leaves you with the scenario you are in now.

How much do you need to borrow for the holiday home?

luckyfool

There are lenders that would potentially even offer a mortgage now for you to buy a property which you would not live in immediately, but only as long as you intended to live in it within the next couple of years. The fact that you already own it, and are looking for a capital raising remortgage is probably what is knocking you out for consideration for these types of residential deals.