Really need opinions on whether this is sensible

Metermaid

Ok, our situation is getting more and more involved and I really need to take a step back and assess what we're trying to do - would welcome some impartial opinions!

1 - we lost sale on our property (which is empty, we're renting away), this happened just before we were due to move

2 - decided to try and save purchase, EA mortgage advisor set up Northern Rock 'Buy to Let', on the house for sale, initially supposed to be for 209K, but they rated letting income at less than we thought so have offered us 163K.

3 - We already had Halifax offer for 48K on new property, but now NR are offering us less we were told by MA to just go back to Halifax and ask for 96K to make up the shortfall, this was to be on a no penalties deal so we could pay off when house sells.

4 - Halifax MA in branch said no as they wouldn't take potential rental income into consideration.

5 - MA at the EA is non-plussed she says never had Halifax turn one of these down before and our income (total of 44K per annum), is more than enough.

6 - She's getting letter done from EA to guarantee potential rental income which she says Halifax should accept.

(hope someone is still reading this :rolleyes: )

Halifax will offer 72K, so thinking of taking out 24K personal loan to cover shortfall - basically we feel we've invested in this property, survey etc - and would have to payout all over again if we let it go, then we could be in a long chain again etc, etc, we're paying 850pm to rent - yada yada

Are Halifax being difficult - would other lenders be less bothered by the situation?

Anyone have any input here please? - Hope I've made sense - I am so fed up of this rollercoaster

Thanks

R

silvercar

If I've got this right, the 163k mortgage on your current home will be (more than) covered by the rental income you hope to get.

So then with your salaries of 44k you want a residential mortgage of 96k.

I don't see why this should be a problem. I wonder if NR will do both mortgages for you.

It seems silly to take a personal loan with much higher payments than put it all on a mortgage just to stick with the Halifax.

Would it be worth considering getting tennants into your home now, so that you can prove the letting income?

Metermaid

silvercar wrote:

If I've got this right, the 163k mortgage on your current home will be (more than) covered by the rental income you hope to get.

So then with your salaries of 44k you want a residential mortgage of 96k.

I don't see why this should be a problem. I wonder if NR will do both mortgages for you.

It seems silly to take a personal loan with much higher payments than put it all on a mortgage just to stick with the Halifax.

Would it be worth considering getting tennants into your home now, so that you can prove the letting income?

The only reason we were thinking to continue with the Halifax is that it would save paying out again for another lender to do a survey, fees etc....which would also save time - we know the owners will go back on the market if we can't get this wrapped up soon - it's likely to sell very quickly if they do.

We were hoping not to put tenants in as we are hoping for a sale soon and wouldn't want to wait 6 mths for a tenancy to end.

Ian_W

We were hoping not to put tenants in as we are hoping for a sale soon and wouldn't want to wait 6 mths for a tenancy to end.

Ah, ha!! If Halifax are aware of this it may be the reason why they're not prepared to offer you a residential mortgage which on your salaries appears to be within normal lending ratios.

The BTL is a semi-commercial loan which relies on rental income being sufficent to fund it - rather than salary which is the case with a residential mortgage. In your case you will be reliant on salary to cover both mortgages and if Halifax are aware of this rightly IMO they're counting both lots of outgoings when looking at how much they'll lend you.

Whether switching provider is the right course, I really don't know but getting a BTL mortgage for a property you don't intend to let but still have up for sale seems "problematic" to me. I would have thought a bridging loan might be more appropriate.

Perhaps one of our resident brokers would give their expert view?

MortgageMamma

A bridging loan is a possibility, but they are expensive to arrange and pay, I might venture to suggest if the OP doesnt have the affordability for both mortgages then to accept the facts and wait until the time is right to buy other property, as they surely will not have the means for the bridging loan.

Your EA advisor obviously does not know what they are doing as they should have known halifaxs stance on rental income and also why did you see an advisor in a halifax branch also? If you'd have seen one advisor for both issues perhaps this situation may not have arisen.

Metermaid

Ok - so is Halifax's stance well known? because the advisor in EA still insists that if we have a letter stating £750 potential rental income then Halifax won't turn us down for the 96K - is she talking rubbish?? She advised us to go into Halifax branch to see advisor in person, when we needed to ask for 96K rather than the 48K we already had offer for - our previous dealing with Halifax had been over the phone. The EA advisor has only dealt with the NR offer.

We are currently finding £850 a month to rent so it seemed sensible to try and use this towards saving the purchase.

I take your comments on board MM - because that's what I asked for - maybe it is time to give in

Ian_W

Metermaid,
The Halifax appear to be looking at your income to support BOTH loans. "Potential" income isn't income, you're not going to be earning it if you're not going to be letting.
Your EA advisor has already "cocked-up" with NR, either they didn't know the rental income ratio [unlikely] or they inflated the potential rental income and NR have sussed this and offered a lower figure.
Before giving up you might want to run it past an independent broker to see if it is possible.

Metermaid

Ian_W wrote:

Before giving up you might want to run it past an independent broker to see if it is possible.

Thanks Ian, I'll do that

regularsaver1

Rental income can not be considered on Halifax mortgage - unless the business assessors look at it, but it is unlikely as it can not be guaranteed

Your EA should not be telling you that they know the Halifax underwriting procedures (which have changed in the last week (again) i must add)
As Op's have said - i'd check with Halifax what commitments are being deducted from your income also