Potential Problem with letting valuation

1aleem

My mortgage lender requested that a letting valuation be carried on the property I'm in the process of buying. However he valued to property to be at £550 a month which is slightly less then my mortagage payment of £666 per month.
I asked if there was anything that could be dome to the property to increase this value, he said not really.
So I'm unsure whether I should obtain a second valuation or submit this one. I'm not sure how the lender going to react to this. Any suggestions??

silvercar

Normally they like the mortgage interest payments to be covered by the rental by at least 125%. So at 5% mortgage, they would be looking to give you a mortgage of about £105,000. You would be expected to come up with a deposit for the rest.

BT_man

You obvioulsy haven't done your research.
Didn't you hear that BTL is no longer profitable?

CB1979_2

BT_man wrote:

You obvioulsy haven't done your research.
Didn't you hear that BTL is no longer profitable?

yep it's true, BT_man said so!

love it, just because you may not invest in this way, why can't others?

personally would try and get a couple of letting agents round to look at it.

what are other similar properties renting out for in the area?

RHemmings

CB1979 wrote:

yep it's true, BT_man said so!

love it, just because you may not invest in this way, why can't others?

personally would try and get a couple of letting agents round to look at it.

what are other similar properties renting out for in the area?

Nobody can guarantee what will happen to house prices. But this does look like a very unlikely investment. But the OP doesn't say that it is a BTL, he could be trying to keep a family home, or might be going overseas. It would be interesting to ask the area and type of the property, and what it's valued at. But the OP didn't ask us whether it was a good investment, just what to do about the letting valuation problem.

BT_man

CB1979 wrote:

what are other similar properties renting out for in the area?

Talk about a dumb question. I'd say £550 just like the agent quoted.:p

CB1979_2

yes but if other properties are renting for £700 a month then there seems to be a problem with the valuation, if they are equal to his potential property.

but if the general rental prices are £550 then there's no real point getting a second valuation carried out, as they'll just tell him the same thing.

1aleem

BT_man wrote:

You obvioulsy haven't done your research.
Didn't you hear that BTL is no longer profitable?

Well I disagree, I was a one of three tenants in shared 5-bed house in the exact same area myself. And the landlady's total rental income was £740 per month.
The house is nearby a major hospital and university, so nurses and students from everywhere are always looking for accomodation around here.
The only real difference with the house is a I'm buying is that the kitchen is smaller and its a 3-bed. That's about it.

CB1979_2

not 100% sure on this though, but doesn't it work out to cost more to rent to multiples?

did you explain to the valuer you wanted to rent out on a room basis?

so would usually be £550 (eg) to rent as one let or £750 to rent to 5 people sharing?

then you have the problem of this HMO thing (I know nothing about this, just from what i've read on here).

withouth going too far off topic, would seriously look at your sums, cos when you factor in all the insurance, etc etc. you may be looking at more than a £100 deficit each month.

good luck though matey and hope it all works out for you!

seraphina

Simply put, as I understand it.:

your landlady was getting 740 for a 5 bed = 148 per bedroom
your have been valued at 550 for a 3 bed = £183 per bedroom

What is it about your house that makes it worth an extra £35 per bedroom per month? You've already said it has a smaller kitchen...

1aleem

seraphina wrote:

Simply put, as I understand it.:

your landlady was getting 740 for a 5 bed = 148 per bedroom
your have been valued at 550 for a 3 bed = £183 per bedroom

What is it about your house that makes it worth an extra £35 per bedroom per month? You've already said it has a smaller kitchen...

There was 3 tenants in the 5-bed house @ £260 (double bedroom) + £240 + £240 = £740.