Finding BTL remortgage and the process?

Beckyy

In a nutshell we own 1 BTL mortgage free, new tenant is moving in at the end of the month. We would like to remortgage (around 60% LTV) to free some equity and purchase a 2nd BTL property.

What is the normal process with regards to a lender valuing the property, do they like to have somebody view the property and value it or do they do this another way?

Is remortgaging a relatively simply process?

I'm not 21 for a few more months, would this be an issue when it comes to finding a product (OH is 24)? I know TMW and quite a few other high street lenders have a minimum age of 21, however have seen a few without one. Would this impact hugely on the products and interest rates available to us?

We encountered some problems with our previous IFA who arranged our own mortgage and previous one, and it's now a case of once bitten twice shy with brokers. There aren't many locally to us and the only one I've found which looks okay seems to be charging £330 fee plus comission for a mortgage, which is higher than I would like. I am keen to do it ourselves if this is possible.

A few figures:
Current BTL worth around £75K, rent is £375pcm. Own home worth £125K, £97K remaining on mortgage with Woolwich. My contracted wage is £7K actual pay approx£14K, OH a shade under £28K basic + a bit of overtime here and there.

Thanks for any replies and advice!

GMS

Lender would send a valuer round to ascertain value and rental income.

May well be options. BTL has many lenders broker only so you really wouldnt do any harm engaging one.

More than likely need to pay a broker fee as the loan would generate very little in commission to the broker.

ACG

The process with BTLs is pretty much the same as residential - its more the underwriting which is different.

A surveyor will go out and do a valuation as normal.

With regards to products, some of the better rates are not available on the high street, using a broker could end up saving you a lot more than £330, find what you can and then speak to a broker would be my suggestion. If the broker can save you £500 then surely £330 is a good investment?

£75k valuation will be the magic figure, any less and you will find some lenders will not offer mortgages. Also some do not do mortgages below £50k

Beckyy

Thank you both for the replies!

I will go and see the broker tomorrow and have a chat with them I think - no harm in seeing what they can offer.

I was suprised to see some lenders don't offer mortages on properties under £75K, I'm quite certain it should be valued at that though. However, I was looking at a 2nd BTL priced around £60K so something for me to be aware of.

I know it would vary hugely, but out of curiousity what kind of interest rate should I expect to get, around 4-5% or? Would there be any issues from us already having a tenant and a (market value) rent set?

GMS

There is a trade off between rates and arrangement fees with BTL's.

With a property valued at 60k your options would be limited in terms of lenders.

Ensure any arrangement fee is worth paying in terms of savings.

Age will restrict too, as you have discovered.

Broker should be able to go through options with you and hopefully get you a solution.

ACG

With a 25% deposit there are rates of 2.99% available - but the fees can be high on BTL's. Going off the size of the mortgage your looking for, i would think your probably better looking at mortgages with lower fees but you/your broker can do some calculations to work out which is best.

Beckyy

Wow, 2.99% is lower than on our own mortgage! Thanks again for the replies. If age was a big problem we could wait until my 21st as it's not too far off, would rather get the ball rolling now though.

Thrugelmir

The source of the deposit may be an issue for some lenders.

GMS

Thrugelmir wrote: »

The source of the deposit may be an issue for some lenders.

Raising funds on a buy to let for further buy to let purchase will be fine

Beckyy

Thanks again for the replies everyone.

I've been in the see the broker this morning and booked a proper appointment to talk about it, although from basic details they said it should be possible with my age being the main restriction on providers.

Beckyy

Just to update - We saw the broker and he was unable to find us a product. Initially he thought it would be do-able just with limited choice however we hit a brick wall with every product we looked at; if it wasn't one criteria we didn't meet it was another. These being:

- I'm under 21
- The property is unencumbered/mortgage free
- It used to be our home
- 1st tenant moves in this month so no rent history
- Although we would purchase another BTL, a good chunk of money (£20Kish) would be for private use (eg. car/things for own house/selves)
- Internal floor space is under 60m2
- Value should be £75,000, however no current mortgage valuation so could (but hopefully wouldn't) be less.

The broker suggested we wait 6 months so that I'm over 21 and we have 6 months of rent history. I must admit I'm dissapointed and quite suprised at how difficult it seems to be to remortgage in this situation. I anticipated we would be limited with products, but not to the point where there wasn't a single one available to us!