Assessing a mortgage application with background mortgages

zippy08

Hello folks

I would appreciate informed opinions on whether I'm being unrealistic in my intentions, or does the situation I will describe below look like an achievable goal?

I would like to apply for a mortgage to buy a new house as my main residence. I intend to let out my current home; mainly because with the current state of the market, I don't expect to sell it quickly enough and there is a real risk that I lose the option on the property that we have waited two years to find.

• From speaking to estate agents, rental yield will be adequate to cover the mortgage payments on the current property at current rates (and probably up to about 4.5%). I don't expect Consent-To-Let to be a major issue with the lender (informally sounded them out).
• I also have another property that is let out, and that is entirely self-funding (monthly rental is approximately 30% of mortgage payment). I cannot sell this property right away because I may not break even.
• I have an excellent credit record per Experian - the maximum possible score, and no borrowings other than the above (admittedly substantial).
• I have funds for a 30% deposit, i.e. application will be 68%-72% LTV.

Are there lenders that will consider such an application, i.e. have the appetite for the complexity and able to assess the risk objectively?
Alternatively, which ones will not touch the application with a bargepole, or are best avoided because they would not process it efficiently?

Thanks in advance for your insights!

Dave_Ham

This sounds well thought out and sure it is all achievable, given your information provided..

Is the other self-funding property a traditional buy to let mortgage?

You may find lenders will get a bit funny if you have 2 consent to lets - although the better the broker the better the chance of achieving the optimum solution.

Good luck and avoid Santander and the HSBC crew

zippy08

Hi Dave
I am a bit of an accidental landlord, never had any plans to be a property magnate so both properties were purchased with intent to live there but plans changed. In other words, the first let property is a CTL and the plan is to go the same way for the second.
In any case, I am unlikely to hold on to both properties for the long term.
Is there a particular reason for your comment about Santander? I know they get a lot of bad press about their customer service (which in turn suggests they probably haven't got their act together across the business).
I am considering applying to them because my first let mortgage is currently with them, and I have a couple of other related products. I haven't had much to do with them since, but I haven't had any hassle from them. I thought that might count for something, seeing as they already know a piece of my financial history. Could that actually go against me?
In general, what is known about their thinking on risk assessment?

The_J

Hell no, not if your first one is with them. That's bound to mess up.

You need to speak to a broker. Some lenders have different requirements for the other properties to be classed as self funding. Satander probably can do it but I'd get everything looked over by a broker first.

Thrugelmir

zippy08 wrote: »

I am a bit of an accidental landlord, never had any plans to be a property magnate so both properties were purchased with intent to live there but plans changed. In other words, the first let property is a CTL and the plan is to go the same way for the second.

Consent to let is only ever granted on a temporary basis. So you'll need to factor this into your medium term calculations.

Is the mortgage lender on the second property aware of the first property? You may have sounded them out but did they have the full facts when responding.

Thrugelmir

zippy08 wrote: »

Are there lenders that will consider such an application, i.e. have the appetite for the complexity and able to assess the risk objectively?

Hardly complex. More a question of whether you are happy to pay the risk premium that may be demanded.

zippy08

Thanks for the responses, people.
Satander, eh? That's a clear vote of confidence, then! :eek:

Thrugelmir:

>Is the mortgage lender on the second property aware of the first property?

Yes, they are. And you're right, I need to formalise the arrangement.

Hardly complex. More a question of whether you are happy to pay the risk premium that may be demanded.

I meant that it's not your straightforward swap from one property to another. There's more to take into account, and I would guess there are lenders out there that can't be bothered with that degree of scrutiny and/or will refuse outright to look at it.
Does the risk premium manifest itself as a higher interest rate, or could it limit the loan amount?

Dave_Ham

J is on the money - enjoyed the Satan der part also..

Worst solution would be to speak to Santander, massive own goal and likely to upset your current consent to let also.

You need a decent broker on board in the short term and some contingency plan for the medium to long term..

You will need to attack this with one of a select few lenders from the information provided.

All the best...

motch

I'm looking at changing my mortgage to Consent to Let. Would I be likely to keep on my 2.0% + base rate SVR ? with Cheltglos and less than 25k left. Any charges for this ? Currently on a repayment, would also consider a swap to Interest Only if could be done.

Simon_gloster

C&G will not let you stay on SVR, you will have to take a CTL rate. Any deal where you are not tied in you have to come off it.

zippy08

I need some more advice from you knowledgeable folk out there.

How should I go about choosing a broker to make the scenario in my original post happen? There are the smaller, independent brokers who probably have a good feel for the market and then you have the likes of Charcol/L&C who will claim buying power with the lenders on account of volume.

For want of a better phrase, is it fair to assume the bigger players would have more 'clout' to get a deal through, or is that a myth? With the independents, the only way to assess their likelihood of success seems to be word of mouth, which can be subjective.

I need to make a decision today, so all advice very welcome! Thanks in advance.