Bewildered by Buy-to-Let Barrier ...

UberGeek_2

Some advice would be welcome...

My wife and I, both having taken early retirement, are hoping to sell up and move to the coast.

We have £250,000 in savings, and a house valued at £180,000 on which we still owe £60,000.

We therefore have around £370,000 in assets and cash.

We've seen a house at £285,000 that we'd like, clearly we don't have enough cash. We were advised that a bridging loan would be extremely expensive, and it was suggested that we opt for a buy-to-let or let-to-buy mortgage for something in the region of £95,000 on our existing home to cover the shortfall and buy us some breathing space until we renovate and sell our current home.

However, none of the mortgage lenders are prepared to accommodate us, and their explanations seem bewildering. They seem fixated on our lack of regular income and age – which sort of go hand-in-hand with being retired(!), rather than the earning potential of our current property and the amount of mortgage being sought being significantly less than the value of our current house.

Anyone any ideas?

UberGeek

Let_Us_See

You have hit the nail on the head! Lenders are quite conservative and underwriters don't expect retired people with lack of regular income (your words) to have the effrontery to apply for a mortgage!!! Your problem is compounded by many lender's not accepting rental income towards mortgage affordability.

However, you do not mention your ages or guaranteed income in retirement, which I assume you must have as you have taken early retirement? I have a feeling this mortgage is obtainable, you just need an experienced broker who knows the ropes. Don't give up if the first broker says "no chance."

Thrugelmir

If you were to complete the transaction you are proposing. You would be asset rich and cash poor. If the BTL property was empty or the tenant defaulted on the rent how would you pay the mortgage?

Majority of BTL mortgages have minimum income levels as a basic criteria.

Why not sell the property prior to moving.

Thrugelmir

Let_Us_See wrote: »

Your problem is compounded by many lender's not accepting rental income towards mortgage affordability.

If the property is unmortgaged then quite rightly income will be allowed.

Wh05apk

Presumably you have pension income? what does that come to?

Lenders will accept that, subject to meeting their minimum (normally £20-25k, although a couple have no minimum figure)

Another point though is that it sounds like you are refurbing the property then selling? A BTL should be to rent out.

ValHaller

UberGeek wrote: »

Anyone any ideas?

Yes. Scale back your ambition. Plainly where you want to go to is very feasible. But you have a problem getting there.

I suggest you forget about this particular house and renovate your present home from your cash pile and you sell, moving into rented accommodation. Once in rented accommodation buy with your cash pile.

Conrad

There are possibilities here, I would for once suggest talking to a GOOD broker, not a call centre or large firm - a small bespoke broker.