Non Status Bridging loan

Phil_rich

Hello,

Just a quick question, can you use a non status bridging loan as the 25% deposit for a mortgage application on a house?

Thanks
Phil

p.s. I don't need any other comments or opinions about why this should or should not be done.

GMS

How do you intend to repay the bridging loan? Not likely to be acceptable anyway but a bridging loan would need to be repaid pretty soon. Also why non status?

Phil_rich

The bridging loan would be taken over 6-9 months at which point it will be settled, by way of re-mortgaging or a second charge mortgage.

The bridging loan is needed as we are wanting to buy a property which is BMV and in need of renovation and extending. We can fund the renovation, through savings and income over the 9 month period.

The final house value would allow a re-mortgage to cover the purchase cost and the loan with fees plus leave a decent deposit.

Phil_rich

Anyone know an answer?

Simon_gloster

Non status, do you mean self certify? If so, how do you intend to remortgage the property? Lets say you get bridging finance and not a mortgage for whatever reason then you really are screwed.

Most lenders are against taking any loan as the form of a deposit for a property. However, should affordability stack up with the bridge loan in place their is not much they can do.

Phil_rich

We would re-mortgage the usual way. Once the renovations are complete there will be a least 20% equity/deposit in the house after all of the existing costs/loans/mortgage are collated together. House value will be circa £400k and the original purchase price plus renovation costs would be circa £310k.

Simon_gloster

My question is still not answered around self cert/non status. House prices are irrelevant if you need a fast track self cert loan.

holly_hobby

As Simon states, non- status is NOT self cert - they are 2 sides of the same coin, yet very different.

Non-status - as the title suggests, this means that the lender performs NO status verification (inc income) (max LTV 60% from the 1 resi lender I know of whom was (withdrawn some yrs ago) in this market).

Self cert - status checks are performed as normal, albeit with the exclusion of income verification ( I would guess S/C is what you really mean in your original post) - again no resi lenders in this market.

In saying that, what is preventing a lender/provider verifying your income ? Are you self employed (with books not upto date), or employed with various sources of income that aren't all declared ?

Secondly, mge lenders don't like deposits sourced from loans, and this may be a deal breaker from most resi lenders.

Regarding later redemption discussed in above posts, 2nd charges are at the permission of the 1st chargee (which means they may refuse). Furthermore, if you are prevented from remortgaging (eg - due to a change in circs or issues re the property ie survey) and can't redeem the bridging finance from such sources, you'll have to have a plan B in place (to avoid sale), so I wouldn't enter into this without having one worked out (expect the best, and plan for the worst as they say !).

Conrads responses to various threads suggests he has experience of both investment banks (which may be the answer for a self cert bridge application), and bridging finance providers, he may be able to help here (if he spots the thread).

Hope this helps

Holly

Simon_gloster

A wonderful analysis again. X

Phil_rich

Non-status maybe was not the correct term to use. As you suggest, I am self employed and for only 13 months so no formal accounts to show. There would not be an issue in getting a mortgage initially, so my mortgage advisor tells me. Income and affordability would not be an issue either, but we do have another mortgaged property so that will throw up more no's when combined with the self-employed.

As for a plan B then yes, we could sell either property and that would not be an issue for us. Yes it will potentially be our family home but not at 'any price'

holly_hobby

Phil_rich wrote: »

Non-status maybe was not the correct term to use.

Thats fine ... we only know the diff because we work in the industry .. So self cert it is ...

Phil_rich wrote: »

I am self employed and for only 13 months so no formal accounts to show. There would not be an issue in getting a mortgage initially, so my mortgage advisor tells me.

Which means I am guessing that you've not sent in your first HMRC return either. So without this or accounts - there is no way you'll get a residential mge for the main borrowing you seek (in addition to the bridge), as self cert mges are no longer marketed. So not quite sure where your adviser is going with here - unless s/he's mistakingly thinking fast track

Phil_rich wrote: »

Income and affordability would not be an issue either, but we do have another mortgaged property so that will throw up more no's when combined with the self-employed.

If this is let under an AST and self funding, then the mge commitment on it may be set aside by the lender assessing your requirements for your new main residence.

If not, then yes your income shall have to be sufficient to service all commitments inc both mges - and with no accounts or evidence of SA302 for your trading period - you'll be a little stuck.

Phil_rich wrote: »

As for a plan B then yes, we could sell either property and that would not be an issue for us. Yes it will potentially be our family home but not at 'any price'

Of course that is a plan, of course your redemption and on going bridge finance costs, will continue until the property(ies) are actually sold and redemption occurs.

Others will be along for comment ....

Hope this helps ...

Holly