First time buy to let - light refurb mortgage suggested

Posie1972

Can anybody give me some advice please?

I have had an offer accepted on a property (£66K) with a plan to renting it out (rental income approx £425-475 pcm). I have £36K to put down as a deposit and have applied for a buy-to-let mortgage of £30K, through L&C, and they have come up with The Mortgage Works and my application is currently processing. TMW have done a value/survey and have come back and said I will need a "light refurbishment" mortgage product instead. Although the property does need work doing to it (e.g. painting, decorating, replacement kitchen etc) it is habitable, it has all services still connected, gas central heating, fully functioning bathroom. The kitchen, although sparse (i.e. larder cupboard, sink, 3 cupboards and a gas point for a cooker) could be utilised so I don't understand why they are classing it as a "light refurb", surely if the property is habitable, the choice of decor and facilities within the house is a personal preference? Like I said, I do plan on doing work to the house before it is put on the rental market so don't see the necessity of changing the mortgage product? L&C were a bit surprised as well as the amount I'm asking to borrow more than meets TMW critera? Can anyone advise on the best way forward please?

The_J

You're kinda stuck, the surveyor is the lender's eyes and ears and if your eyes and ears are telling you something you tend to agree with it. Fortunately you are not looking to borrow too much so the higher costs will not be too keenly felt.

You could try elsewhere but come across the same issue and then be down two valuation fees...

Thrugelmir

What's the retention they wish to impose?

Posie1972

Thank you for the speedy reply! If the worst comes to the worst then I will have to go ahead with a refurb mortgage. I have looked up the details on TMW website though and, if I am reading it correctly, they will withhold some of the mortgage? I have savings put aside to cover the cost of any works so am a bit concerned this will have to be spent on covering the shortfall from the mortgage to get the house sale completed, thereby leaving me no money to complete any works?! I'm not even clear on what "refurb" works they want or what criteria I need to meet? This has only been sprung on me in the last few hours so am trying to find as much info as possible! Thank you.

Posie1972

No details as yet Thrugelmir, my application for a BTL is currently processing, my nice man from L&C has gone back to them with details I have given him in the hope they may back down on insisting I have a refurb mortgage, he seemed surprised they had suggested it given the size of the deposit I have to put down and the mortgage amount requested.

The_J

The Light Refurb product has no retention in this instance, Thrugelmir stunning us all again with his spectacular mortgage knowledge and making people worry for no reason.

This is from their product guide:

Allows for minor refurbishment works up to a maximum of £25,000. Improvements to be carried out within 3 months of completion and prior to letting, a re-inspection fee will be payable by the customer following completion of works. First time landlords purchasing accepted up to 65% LTV.

Rate is 5.74%, fee is 2.5% of the mortgage balance.

Thrugelmir

The_J wrote: »

The Light Refurb product has no retention, Thrugelmir stunning us all again with his spectacular mortgage knowledge and making people worry for no reason.

Better than being a J*!!!!. Some glasses may be in order.

Apologies OP. Being an open forum it does attract people that one would never deal with in business.

Retention
The retention amount will be held, once works are completed 70% of the after works value to a maximum of £25k can be released, subject to successful re-inspection by the original valuer at a cost of £100 (taken from the original release of funds) and payable by the customer.

Minimum Retention - £2,000
Maximum Retention - £25,000

Posie1972

I read it as being monies held until completion of the works as well? Now I'm really confused! I'm also confused to what extent works will need to be carried out? If its the sake of putting in a new kitchen, which I had already planned on doing, would it be worth witholding money for the sake of what will probably only be £2K on a £30K mortgage?

The_J

Actually no I'm right, TMW will allow you to borrow 70% of the purchase price (or 65% for FTL) which is all you need. You don't require funds to be retained.

Posie1972

So no retention, just higher interest rate on monthly payments? Also, the current mortgage I applied for had an arrangement fee of £1K, the 2.5% would make it cheaper? Would they really change the product for the want of a new kitchen.....? I'll sit tight and wait and see what my nice man from L&C comes back with, fingers crossed! Thanks very much for all your information.x.

Thrugelmir

The_J wrote: »

You are wrong so often that I immediately assume everything you say is BS. Broken clock is right twice a day.

I'll be here long after your gone. As the way you are marketing yourself as a professional person is truly shocking. You do rank as one of the worst mortgage brokers to grace this board.

Thank goodness that there are some that ply their trade in a decent honest manner on here. Without the need of resorting to petty insults.