Getting a Mortgage after buying with bank loan

Eurika_2

Hi All, i've just signed up to this forum and i'm a real fan of this site and i'd be truly grateful for some much needed advice please from the experts out there on the following points:

1: Am i right in thinking that Self Cert/No accounts BTL/residential mortgages are a distant sweet memory? As i'm really desperate to get on the property ladder ASAP (before i throw away all my savings on renting) but i'm pretty certain that in the current climate i probably won't be able to get a mortgage as a first time buyer and i frequently move/spend about half of each year abroad so i'm not on the electoral roll and i have a mail box address due to the transient nature of my work/lifestyle which has trashed my credit score (despite the fact it was previously very good and i've never missed any payments or had any CCJs etc and am currenty debt free). I have total savings of about £14k but irregular temp work and hence my preference for a Self Cert/No accounts mortgage. I would be able to put down a deposit of max £10k on a low value property (of about £30-50k).

2: If getting a Self Cert/No accounts mortgage is no longer an option, then my 'Plan B' is to take out 2 seperate bank loans at banks i hold accounts with (i've been told i can borrow a total of about £21K between the two) and if i put in £10K of my own money then effectively i'll become a cash buyer (meaning i can move faster, and avoid mortgage arrangement and broker fees) and i could just about buy a £30K property probably in the N.West area (although obviously at a much higher bank loan rate of about 8.9%):eek:
So, my main question is, do you think that if i manage to buy BMV property in this way, (also assuming that both banks i hold accounts with are happy to both lend to me at the same time as each other(?) how easy/quick do you think it would be for me to get a mortgage on the property once i already own it?, i.e. within 1 month? or would i have to wait 6 months? And am i right that as i would have bought it only with savings and bank loans that i'd be looking to get a first time buyer's mortgage or would i qualify for a re-mortgage? And also am i right in assuming that it should be alot easier to get a mortgage on a property that i already own, if it has inbuilt equity?

I really need to know in advance if i will have a good chance of being able to get a mortgage in this above scenario inorder to quickely pay off my bank loans and then pay a lower mortgage interest rate. Obviously i would try to buy a BMV property with built in equity from day one to improve my chances of getting a mortgage.

3: Also i'm not sure what would be the best mortgage to eventually apply for as i'd like to buy a terraced property or possibly an appartment which i can live in myself but also rent out one of the rooms (under the tax free rent a room scheme) or ideally i'd prefer to buy a property which is divided into 2 seperate self-contained units, one of which i will live in and the other one to rent out for income, so am i right that i'd need a residential mortgage if i live in the property but rent a room under the rent a room scheme? And that i'd need a BTL mortgage in the 2nd example?

Well sorry for all the questions, and i really hope some of you property/mortage experts out there can shed some light on this subject please and many thanks in advance for any advice:A

Conrad

If you attempt a remo, you will face the same problems as you do right now. Once you have a stable history in one place and in the UK, then you might want to attempt a remo, but for self cert the max will be 80% at best, and you will need to show 3 years in the UK.

Those loans will go up when rates rise.

Kavanne

A bank shouldn't give you a personal loan for the purpose of buying a property so you may struggle to do that.

zzzLazyDaisy

Let's get this straight....

You don't have a job, for six months of the year you're not in the country, but you do a bit of temping now and again.

You plan to buy a house in the North West, preferably already split into two units so you can rent one out and live in the other, and don't want to spend more than £30,000 (I'd be surprised you can get a house for £30,000 even in Moss Side, but let's assume you've done your homework).

You plan to take two loans to run concurrently, totalling £21,000, on a higher interest rate than a mortgage, with much shorter terms (and therefore much higher repayments) and your banks have assured you that even though you have no regular income, they will lend you this money.

Have you heard of the term 'sub-prime lending?'

Sorry, but I think this is a wind-up.

Eurika_2

Hi again and many thanks for taking the time to reply, and Conrad, sorry for my delayed response as i went off line shortly after my posting and i really appreciate your advice re: remortgaging, and maybe i should have added earlier that i have an excellent record with both my banks, having previously paid off a number of large loans with them (or they wouldn't be so keen to lend to me now), but my main problem is the correspondence address/mail box i need to use which has meant i've inherited the bad credit rating of some of the non-legitimate co-users of that address (i only discovered this a few years ago after i ordered a credit report and to my horror i read a few pages of name of people all unknown to me who also use the same mail box address but who are black listed for various types of fraud!) This has meant i can't even get a contract mobile etc, so although i have a good record with my banks i don't know which records the mortgage lenders would use.

Although i am currently renting accomodation, i'm really not sure if i inform all my banks etc of my new residential address if that will have a drastic effect on my credit rating, as i read somewhere that you need to have lived at the same address for atleast 13 months for it to improve your rating(?), and that moving in itself can go against you with regard to credit ratings. Also i found out that the Electoral roll won't be updated till December by which time i plan to leave the country for atleast a few months and i can't afford to pay rent when i'm away so its back to the mail box address again. Obviously if there was some way that i could buy a low value property (using banks loans and my savings then remortgaging) it would not only provide a UK base for me where i could also store my things when away, but it'd also solve my accomodation address problem, although it seems to be a Catch 22 in this respect!

Could you please clarify whether when you said that i'd have to show 3 years in the UK to get a remo, does that mean (as a British citizen) i'm not allowed to leave the country for 3 years to get a mortgage?! Also wouldn't some of the morgage lenders also take into account achievable rental income i could get (to help repay the mortgage) and also the inbuilt equity?

Kavanne, many thanks for your advice also re banks not lending for property now.

And zzzLazyDaisy, thanks also for your reply, and i can assure you that this isn't 'a wind-up' as suggested. Also for your information i have successfully bought and sold 2 properties (at a decent profit) in the UK and abroad during the last 5 years and i have repaid an 85% LTV mortgage and a number of large bank loans off in full, so while i agree i have plenty to learn and am genuinely very grateful for any expert and well intended advice; i think i have some idea of what i'm doing, and i can credit my previous 2 successes partly to the rising market at that time but also to the indepth research i did and to buying BMV.

Ofcourse i'd much rather not have to rely on the convoluted approach of taking out bank loans (as an open bridge type finance method till i can remortgage), however this was the point i've been trying to clarify here: if/and how quickely i could get a mortgage once i already own a property with in built equity and rental income. Obviously if this won't be possible then i will look into other options.

Mrs_Bumble

I am curious as to whether you actually have an income?? If self employed more than 2 years accounts. If not then you will struggle to obtain a mortgage.

With insufficient credit rating/history, no stable address, not on the electoral role - you will struggle even further.

Buy to let mortgages have a max of 60 - 75% LTV, minimum income requirements and few lenders in the field and very stringent and most not happy to convert an existing residential into a buy to let- so you will struggle.

As for the minimum time you would have to wait 6 months from title registration.

I think you will flounder with this scheme.

Eurika_2

Many thanks for your reply Mrs Bumble and in answer to your question: yes i do have an income (but as i've done a combination of self employed and agency/temp work with irregular assignments as opposed to fixed contract work, i previously obtained a Self-Cert/ no accounts BTL mortgage about 5 years ago through a broker), but i realise things have alot since then, but are you saying that self-cert/ no accounts BTL mortgages (which only take into account rental income) no longer exist at all in the UK? I've never kept accounts or used an accountant so i can't provide these, although i could provide bank statements and some pay slips, for some but not all of the last 2 years.

I agree that without having a stable long term address and not living anywhere long enough to get on the electoral roll, definately isn't helping my cause, but IMHO this all seems very unfair as surely the fact that i'm currently 100% debt-free, and that over the last 9 years i've paid off in full a number of loans previously held by me (including several over £10k) and an 85% mortgage all without ever missing a single payment, so surely this counts as a relliable credit history??
Also if i buy a property in the £30K region and i put in £10k of my own money then surely paying a 33% deposit also would go in my favour?

Thanks very much also for your advise on the max LTV on BTL mortgages which wouldn't be a problem for me, although if i had to wait 6 months to get the mortgage after getting title deeds that could be a problem (although i need to do some more calculations before i rule it out), taking into account savings i'd make on paying rent etc if i move into the property).

Also i was wondering if i lived in the property for 6 months (as my new fixed address,and registered on the electoral roll etc, would that be long enough to significantly improve my credit rating and likelyhood of getting a mortgage? Or is this 6 month period you mentioned unrelated to the permanent address issue, and rather is it just the length of time that one always has to wait after buying a property before getting a remo? Also in my case (if i buy using my personal savings and bank loans as opposed to a mortgage) would this 6 month period still apply? As effectively i'd be applying for a new 1st time buyer or BTL mortgage, unless my bank loans would be considered to be a mortgage?

Thanks very much again for your advice and its much appreciated.

koexelek

Mrs_Bumble wrote: »

As for the minimum time you would have to wait 6 months from title registration.

That's the killer these days.
Stops people buying for cash, then remortgaging quickly to get there money back

Mrs_Bumble

Eurika wrote: »

Many thanks for your reply Mrs Bumble and in answer to your question: yes i do have an income (but as i've done a combination of self employed and agency/temp work with irregular assignments as opposed to fixed contract work, i previously obtained a Self-Cert/ no accounts BTL mortgage about 5 years ago through a broker), but i realise things have alot since then, but are you saying that self-cert/ no accounts BTL mortgages (which only take into account rental income) no longer exist at all in the UK? I've never kept accounts or used an accountant so i can't provide these, although i could provide bank statements and some pay slips, for some but not all of the last 2 years. - There are not that many lenders offering buy to let now and most of them require that you have a minimum income. I only deal with mainstream so one of my colleagues will perhaps chip in here.

I agree that without having a stable long term address and not living anywhere long enough to get on the electoral roll, definately isn't helping my cause, but IMHO this all seems very unfair as surely the fact that i'm currently 100% debt-free, and that over the last 9 years i've paid off in full a number of loans previously held by me (including several over £10k) and an 85% mortgage all without ever missing a single payment, so surely this counts as a relliable credit history??
Also if i buy a property in the £30K region and i put in £10k of my own money then surely paying a 33% deposit also would go in my favour? - its a differenet lending world now, post crunch and whether it is fair or not, that is the way it is. They have to have some way of verifying credit history etc and you have not made it easy.

Thanks very much also for your advise on the max LTV on BTL mortgages which wouldn't be a problem for me, although if i had to wait 6 months to get the mortgage after getting title deeds that could be a problem (although i need to do some more calculations before i rule it out), taking into account savings i'd make on paying rent etc if i move into the property). 6 months minimum - and also some lenders not happy to convert what they would convert as a residential unemcumbered property to buy to let.

Also i was wondering if i lived in the property for 6 months (as my new fixed address,and registered on the electoral roll etc, would that be long enough to significantly improve my credit rating and likelyhood of getting a mortgage? Or is this 6 month period you mentioned unrelated to the permanent address issue, and rather is it just the length of time that one always has to wait after buying a property before getting a remo? Also in my case (if i buy using my personal savings and bank loans as opposed to a mortgage) would this 6 month period still apply? As effectively i'd be applying for a new 1st time buyer or BTL mortgage, unless my bank loans would be considered to be a mortgage? - The 6 months is related to how long you will have had to own the property (6 months from title registration) before you could mortgage it. Getting on the electoral role at that point will help though.

Thanks very much again for your advice and its much appreciated.

Overall I think this would be very, very tricky, but as I stated above, non mainstream buy to let isn't really my speciality and so what I would suggest is get a copy of your credit report and find a good, independent, whole of market mortgage broker that specialises in buy to let and run it passed them before making firm decisions.

Eurika_2

Hello again Mrs Bumble and thanks very much for taking the time to answer my questions which i really appreciate.

I will take your advice and request another credit report and i'll also seek the advice of a non-mainstream broker, and meanwhile i'll continue to do more research before i make any rash decisions.

I agree with your warning that it will be very tricky, but i guess once i've followed your suggestions above and more detailed calculations and research i'll be in a much better position to take the leap (or not).
Many thanks again for your time and keep up the good work:idea::T