Alternative mortgages

Hoping_to_borrow

Hi, we have a portfolio of buy to let flats and our own house has two holiday houses in the grounds. Our financial circumstances have changed since we took out our home mortgage. We have come to the end of our tie in period and had a good tracker rate with Halifax. Unfortunately the renewal options are terrible and the end result will cost us an extra £400 per month. We have a 75% loan to value on the original purchase which has been indexed down by Halifax. The place is worth more because we have developed two holiday houses but as it is a residential mortgage, I can not disclose them. We are not in a position to change lenders because our income is no longer sufficient to support the size of the mortgage. What would be great would be a lender who would consider the whole package and take the income of the holiday houses into consideration too. Any bright ideas would be very much appreciated. Many thanks.

ACG

Do you decliare the income from the holiday homes etc? ie do you pay tax on them?

If you do then its classed as an income and so will be taken into account. for a 75% LTV you would need atleast 1 years worth of accounts however if you have 2 or 3 then that would be better.

If you dont disclose them, then you owe the tax man some money and there isnt a lot you can do bar sticking to the SVR rate which the lender will revert to.

Also - as they were not disclosed to the lender, im presuming you do have planning permission for them?

Hoping_to_borrow

Hi, thanks for your reply. We do indeed declare income from the holiday houses. Our accountant has cleverly apportioned expenses from across the board to limit our tax liability. Do the lenders take the full income into consideration or the bottom line once deductions have come off? The first of the holiday houses is an annexe to our house so planning permission would not have been required. The second holiday house is a converted barn which we had planning permission for and finished it in the summer of 2011. It had a fantastic first season and bookings are promising for 2012 but we do not have accounts for it yet as it only came on board six months ago. Do you think proof of the income, I,e, booking agents statements and bank statements would suffice for the second barn? The reason why we can not declare any of this to the Halifax is because there is something in the terms and conditions which states that we can not develop buildings. Sorry to be vague but I remember at the time that it all had to be hush hush. Surely from the lenders point of view, it should be good news because it means there is more of a chance of keeping up mortgage payments. Anyway, I am afraid to rock the boat incase they increase the rate even more or tell us to get another mortgage. We are self employed now since we took out this mortgage and run a small baking business from a shed in the garden.

Hoping_to_borrow

That is because it is a residential mortgage which I think is rather restrictive.

ACG

Its a pretty complicated situation.
Some lenders will accept projections for income - the fact you have bookins will help with this.

Without knowing the outstanding balance, your self employed income (for the last 2-3 years), your income from the rentals and everything else its far too difficult to give you a proper answer.

I think you would be better getting all of your accounts together, alongside some rough figures of what you expect this year and seeing someone who knows what theyre doing. Lenders understand people use the tax system to their advantage - so some will accept that, some will just see the overall profit and use that.

what you want is lender that will look at your overall income, will accept projections and less than 3 years accounts by the sounds of it...i think you will struggle. To be honest, if it were me i would charge you a fee just for the research because i could spend hours on that and get nowhere.

Hoping_to_borrow

Thanks for your help. The problem is who is up to the job of the challenge.

Would not mind paying a fee if the right solution was achieved.

We have been self employed for less than three years but figures are increasing year on year.

Morgage_Confused

What rate does the mortgage go onto after the tie in period....it might be better to let it drop to the svr and not bother remortgaging just yet?

Hoping_to_borrow

T'wud be 3.5% on SVR or 3.59% fixed for 2 years with a £999 fee. I have been led to believe that the SVR is a riskier route.

Dave_Ham

Hi - I sort of get your plight and as a nice guy always try to be positive with the my advice.

That said, if I have read this properly (and possibly I have not) you had a great tracker with the Halifax and now they are offering you a terrible 2 year fixed rate at 3.59???

Given your challenging circumstances, the lender would need to be flexible if not very flexible but still you want a sub 3% mortgage??

Apologies if I have mis-read, although if I have not I hope you have a plan B

silvercar

Hoping_to_borrow wrote: »

T'wud be 3.5% on SVR or 3.59% fixed for 2 years with a £999 fee. I have been led to believe that the SVR is a riskier route.

If 3.5% means paying £400 more than now, you were on an excellent rate.

You are not going to get much better by moving mortgage elsewhere. So even if you did find a lender, I doubt it would be worthwhile moving mortgage, especially as to move will incur fees. Any new lender will require a valuation and the valuer will obviously notice the barn and baking shed, making a straight forward residential mortgage more difficult to secure.

Personally I would stick with the Halifax, both those deals look good.

In 2 years time you may be able to mortgage elsewhere.

If you do want to pursue a mortgage elsewhere, your best bet would be to employ a chartered accountant to prepare a business plan, accounts and forecasts.

Thrugelmir

Hoping_to_borrow wrote: »

We are not in a position to change lenders because our income is no longer sufficient to support the size of the mortgage.

With a portfolio of BTL properties and 2 holiday lets then something is amiss. Perhaps consider offloading the worst performing part(s) of your portfolio and making your business empire more profitable.