90LTV mortgage with existing property let out?

GoldenEye07

My current situation:

I own a flat with a friend which is very likely in neg. Equity so selling not an option just now – we have got a consent to let from our lender to allow us both to move on with our other halves and we have tenants moving in at new new year.

I have found a house I would love to buy with my wife but trying to find a lender seems like it is going to be very tricky.

The property is 170k and we have 10% deposit so a borrow of 153k.
Combined salary of 61k
Existing mortgage is 686 per month, renting for 725 from Jan.

Now all lenders seem to be different but does anyone know any that will ignore the first property just now for affordability?

So far I have enquired with the best 90LTV deals I can find and they are as follows:

HSBC: according to their online calculator they will offer me what I need even taking the first mortgage into the calculation however when I spoke with them they will only offer up to 80LTV when I am named on another residential mortgage.

Yorkshire BS: They say they would require the first property to be rented for 6 months at 150% rent which won’t happen for us (our rent will just cover the mortgage as above) but they did the calcs anyway taking in the first property and although it was very tight, they would lend around 157k but would be subject to a full application, credit check etc so by no means guaranteed?

Where should I go from here?

Do I get the stuff together and try a YBS application or are there any other good 90LTV deals people know of that will work in my circumstances?

Alternatively do I rent with my wife next year and continue to save.....?

Any advice appreciated.

Dave_Ham

Given what you are trying to do, you have unfortunately attacked this the wrong way.

You should see which lenders will accept the situation at 90%, then assess which one has the most competitive rates at 90% LTV..

Fast forward, start looking at the lenders in the bottom 25% quartile on rates and you may find the lender you are looking for..

Or get a broker to do this for you and you may find using an independent broker will save you much more than it will cost doing this DIY...

Good luck

GoldenEye07

Thanks for the reply Dave,

that's really what I was getting at, if anyone could tell me lenders that would cater for my situation.

I had discussed several times with a family friend who is an independant broker and it was him that pointed me in the direction of checking out the 2 lenders I've mentioned. He didn't seem concerned at all about the first property and said it should be taken out the equation with my consent to let....so turns out that was very wrong?!

If I look at some of the poorer rated lenders obviously my payments are likely to increase drastically which will probably take me over our budget.

Not a good situation at all really - really frustrating that my flat will be self sufficient but it is still holding me back, I would even sell it at a small loss just to start fresh but the loss would be too severe at present I fear.

Anything else I have missed?

kingstreet

Self-sufficiency for most lenders is the rental income being more than 125% of the monthly mortgage payment. Many lenders take only the mortgage interest into account though, not the full capital & interest payment.

Combine this with wanting a higher loan to value than many lenders will consider, even for business without a let property in the background and you're going to run around chasing your tail.

As Dave said, you need to find a good whole market or independent broker and go over the circumstances and your objectives with him/her.

The person you spoke to may have some knowledge of the mortgage market, but he's made an off-the-cuff suggestion which has not come off. You now need to approach someone on a more formal basis.

Trying to do this yourself by setting off at the top of the list in rate order and working your way through one at a time may work eventually, but you may end up with a few unwanted and unwelcome credit searches along the way, as they'll "need to take some information to see what the computer says" as they do it.

Dave_Ham

I cannot believe your friend listened to you, they would have been 2 I would have told a friend to avoid.

No-one on here is likely to tell you lenders that would accept this, as simply we do not have enough information and it would appear we are giving advice which is against the rules.

They are out there and may be within budget, but you may require an independent broker who is not just trying to do a friend a favour and which you would pay for and receive a service which gets you what you want.

Good luck

GoldenEye07

Guys,

Appreciate the advice from you both, it's very helpful.

@ Kingstreet: I totally agree, I don't intend doing loads of enquiries as I know that could end up being counter productive, I think I do need to get some expert advice in my case so I will look to do that.

@ Dave: yeah he did seem very casual about it and that alarmed me somewhat. As stated I will take some proper advice.

Before I do that do either of you see any merit in pulling together my payslips, etc for YBS and letting them do a 'soft search' to give me an answer on their deal? As I said it came in pretty tight but it was a good rate so is it worth attempting?

Dave_Ham

Obviously I do not know your detailed circumstances, but my personal opinion based upon experience of YBS is that they are very selective especially at the higher end LTV's

You always have to be really careful at the banks, as when you speak with them they have 1 set of products, 1 set of criteria and 1 set of charges. Add to this that some are targeting on applications and not completions, you could just be aiding their bonus and wasting your time and credit file searches.

I would call them up, ask someone different the same questions and whilst not allowing them to credit check you - ask what they will lend you.

Think you will get a different answer and figure from previously...

Be interested how you get on...

kingstreet

In your opening post you said;-

Yorkshire BS: They say they would require the first property to be rented for 6 months at 150% rent which won’t happen for us

and you can't achieve this.

What purpose would making a full application serve?

Dave_Ham

kingstreet wrote: »

In your opening post you said;-


and you can't achieve this.

What purpose would making a full application serve?

I think the OP means not disregarding the property and having both as part of affordability.

Not sure that will beat YBS underwriting mind you, but would get another application on the books

GoldenEye07

yes the quick number crunching session done by YBS was taking my existing mortgage into the calculation as a debt and not dis-counting it - I maybe never made that very clear...

Dave, that was my worry, that they they simply wanted me in to run an application on me that was never going to end well!

GoldenEye07

I had one call back left to receive from the initial enquiries I had made earlier this week and it was from RBS, they called me today and did an affordability calc for me - they had to include my first property as per the others but they said they have no other criteria, it's purely affordability they go on.

The issue I thought would be the rates wern't quite as good but they informed me we would be eligable for a FTB deal as my wife has never owned a property - this opens us up to a rate of 4.79% fixed for 5 years and no product fee.

They said the next step would be to have an offer accpeted on a house and come back for the full application.

What would happen if we had an offer accepted and we failed the full application or we find we can't quite get what we need when it's done in full? Do they mean to just make a verbal offer? they said they couldn't proceed until we have an offer accepted?

I'm not thinking of diving straight into this but would be keen to know if do you guys have experience of this or RBS?

Thanks again.