Buy to Let Dilemma !!!

lettbuy

Hi,

I need some advice relating to a Buy to Let situation.

My wife and I, manage a portfolio of 7 buy to let properties worth a total of approx a £million. They are all mortgaged in joint names, all in positive equity, all showing a decent profit on a monthly basis and most of them have very happy long term tenants.

We have had these properties 9 years the longest, to 5 years the shortest.

The mortgages (with 3 different lenders) have all been maintained impeccably without ever missing a payment.

Unfortunately, our private finances are not so squeaky clean due to the recession. I have a number of defaults in my name (no CCJs) for credit cards, bank loans etc most of which the creditors have accepted reduced monthly payments but are obviously shown on my credit file. Under the 6 year rule these won't disappear for another 3 years or so.

I am in full time employment with the same company for 16 years. My wife also works and her credit record is fine.

We want to extend our portfolio but feel we are in a catch 22 situation with regard to our personal credit history. We don't want to approach any of our lenders as we would have to disclose the personal credit history which could compromise our standing with them, but if we don't, we basically stand still.

Are we missing a trick here? Or are we basically stuck until our credit file is clean again?

Can anyone offer any advice on any potential ways to move forward.

Thanks in anticipation.

Dave_Ham

Are the defaults in just your name, or joint?

lettbuy

Hi

Just mine.

Dave_Ham

Then that should be one potential solution to do in just your Wife's name?

There are potentially lenders that would lend, but assume you would need to refinance some of your portfolio to raise the deposit for a new investment?

Alternatively, you would be better doing a deal on the personal, unsecured credit in order to show a satisfied on your credit file?

lettbuy

Thanks for your reply.

Yes, we would need to re finance at least one property to initially move forward.

Although my wife's credit file is clean we are financially linked with the mortgages.

Your last suggestion is unfortunately not viable at this stage.

Are we being a bit naive? Should we set up a company or some other vehicle to manage the portfolio, so my personal credit record is not holding us back from obtaining further credit?

Dave_Ham

No, lending to a business in property portfolio management is virtually extinct. Aside from proven (business) track records, personal credit files (they are often taken into consideration) and higher rates of interest with lower loan to values whilst only having limited liability there is little appetite to lend.

There are lenders out there who will lend in sole name, even though you are financially associated - whether she meets the other criteria in isolation and whether you are both comfortable with the situation is another matter....

Many buy to let deals are exclusively undertaken by brokers, so may be worth you engaging one or speaking with your one who organised your last deals (assuming you did not go direct for them all)

I assume you have already looked through this, but worth checking your existing deals as some may be on incredibly low Standard Variable Rates

BobQ

Why not sell a property and pay off your debts?

lettbuy

Thanks again for your reply, you have hit the nail on the head with just about every observation.

Our broker has seemingly retired so that avenue has closed.

One point you raised, about my wife applying in sole name. Would any prospective lender apply salary multiple criteria, as her salary wouldn't stack up.

We were hoping to rely on our good buy to Let mortgages track record. These mortgages were set up on a self cert basis. Have these now become extinct since the banking meltdown?

Dave_Ham

Given your wife's homeowner and landlord status, there will be a lender for every other circumstance for sure.

There are a few considerations, obviously a broker would be able to take down your full details and then select a lender appropriately as many are broker only.

Thrugelmir

Any attempt to withdraw equity will highlight your personal circumstances.

From an underwriters perspective these 2 statements do not tally.

all showing a decent profit on a monthly basis

I have a number of defaults in my name (no CCJs) for credit cards, bank loans etc most of which the creditors have accepted reduced monthly payments

Perhaps better to maximise the return on the property empire you have already built. Than add an additional property which may bring the whole house down so to speak.

lettbuy

Ok, many thanks for taking the trouble to reply. I will try and locate a broker who may be able to help us. I assume there are restrictions on here with regard to suggesting suitable brokers etc.

Thanks again.