Buy To Let Borrowing

gilly33

Does it make a difference to the size of a mortgage loan when making an application? For example would I have more chance to be accepted buying a property at £90,000 than £150,000 with 25% deposit? I've had a CCJ registered for just over 2 years so I have a very limited choice of lenders. I've also got to present 3 months statements which shows I use my overdraft every month but I pay it back each month also. Does the level of commitment in loan value make a difference?

holly_hobby

Its the essentially the LTV, not the amount of borrowing, that determines how a case is assessed.

BTL is semi-commercial lending, with increased exposure for the lender as this won't be the applicants primary residence, so servicing the mge in times of stretched finances, may not be as high on the applicants agenda.
Hence we have lower LTVs and higher payrates and fees.

So you can see how your relatively recent CCJ (at just 2 yrs old - and I assume unsatisfied ?), will affect the app. Which when continued with the habital use of your OD - suggests on the face of things, mis-management of finances and regular overspending - although in reality we all know that you're only ever up the first mth you use your OD, as every month after that you're simplyrunning to stand still (unless extra capital is injected to clear the OD independent of other commitments).

You will also need as a first time landlord, a min 25% deposit, and if you're already juggling balls finance wise, its hard to see where it will come from, or how you will remedy your current finance situation.

First things first, get rid of the OD and get back on an even kiel.

Also consider satisfying the CCJ - which won't take it away (it will fall off your credit record on its 6th anniversary of registration, unless the creditor seeks re-registration, which is unlikely but not unheard of), but your actions will at least demonstrate to the lender that you have taken responsibility for the debt (assuming its not disputed), and caused at that time by say job loss, or an unforseen reduction in household income, and that now you are in a more stable financal position, you have duly repaid the creditor.

The lender will generally ask the reason for the CCJ, with they looking for a valid reason ie a couldn't pay situ rather than wouldn't pay defiance (as touched on above).

Assuming you have a mge already, as BTLs for first time buyers, esp those with iffy credit history, aren't plentiful !

When you're ready, having resolved your own finance issues and saved your deposit, and especially given the credit blip, I would engage a whole of market broker whom will source the most suitable lender for your requirements (inc access to intermediary only products), whilst supporting you throughout the application process and beyond.

Hope this helps ... good luck

Holly x

gilly33

I have satisfied my CCJ back in November it was registered to me when I was living in Spain so I had no idea until I came back to the UK. I'm not a first time buyer I already have 2 buy to lets and neither have gone into arrears and have had them for over 7 years. I just need to know if the loan amount makes a difference?

gilly33

The deposit is coming from the sale of our family home and is sitting in a high interest account with my husband. So deposit is not a problem.

holly_hobby

The size of deposit (ie the lower the LTV and resulting exposure), may give you more lea way with regards the CCJ, and obviously gain you a product with a lower payrate (should the lender market tiered products).

Your broker with guide you.

Holly

gilly33

The only product he's offering is precise and the rates are really high

Thrugelmir

gilly33 wrote: »

I have satisfied my CCJ back in November it was registered to me when I was living in Spain so I had no idea until I came back to the UK.

That's no defence. Onus is on you to have notified a change of address.

holly_hobby

gilly33 wrote: »

The only product he's offering is precise and the rates are really high

Right sorry, you didn't mention you'd already seen a broker, and been presented with a lender whom will accept the CCJ (albeit you don't like their product on offer).

What exactly are you asking assitance with ??

I'm also, assuming you are selling and buying another primary residence, or are you going into rented ? (the lender will want confirmation and evidence that you don't intend to reside in the BTL post purchase).

Holly

kingstreet

The two most important issues in BTL lending are, as holly said, the loan to value and the rental income v the monthly mortgage interest.

You can normally borrow upto 75%, but that will also depend on the rent. If the rent isn't 125% of the monthly mortgage interest, based on assumed rate, the maximum loan will be below 75% if the rent calculation indicates a lower figure.

ie £100,000 purchase would normally give 75% mortgage, or £75,000. However, you would need rent of £469 to cover that, based on 125% @ 6%pa.

If the property will only generate a rental income of £400, the maximum mortgage would then be £64,000 and you'd have to come up with more deposit.

Different lenders use different formulae, but 125% at 6% is about the most popular one I can think of.

How long out of the UK? How long back?

CCJ registration date? Amount? Creditor? Reason?

GMS

gilly33 wrote: »

The only product he's offering is precise and the rates are really high

With a CCJ it is a case of what you can get rather than what you want. Sorry to be blunt but you are not in a position to be choosy

gilly33

Ok I think Holly managed to answer my original post. I just needed to know if it makes a difference on the value of the loan and the fact that I dip into my overdraft. I know how the yields work I already have BTL properties and I'm looking at buying in the same area because the rental yield is 8-9%. It's worrying making applications and then being turned down which has happened to me most recently and I'm totally aware that I'm not in a position to be choosy I've accepted that.