Nationwide Buy to Let / Mortgage Works

Poppy_Kennedy

Hi there

I am currently with Nationwide on a residential mortgage that they are now charging an extra 1.5% to buy-to-lets.

They have rang the Mortgage Works as its their buy-to let subsidiary and i have just tried to call them with regards to remortgaging and was told that i have to do this via a mortgage advisor.

the problem i have is the following:

the flat is in my sole name.
i currently have gone down the part-time since having children and therefore on a much smaller salary.

how am i supposed to re-mortgage. I cannot currently do anything at all with my Nationwide mortgage, i am unable to fix it, re-mortgage etc etc... so i want to go onto a long term fixed product which allows me to borrow a little extra for property repairs.

I bought the flat for 100,000
it is now worth arounf 140,000-160,000
i rent it for 650 pcm but am able to get 750 with a new bathroom.

what is my next step, will anyone let me remortgage given my part time job - can the Mortgage Works offer me a new mortgage as they are part of Nationwide without havign to give pay slips etc etc i am not sure if they are the same company or an entirely seperate entity that nationwide just refer their customers too?

Thanks any advice gratefully received

Conrad

Mortgage Works need to see an application that makes sense all round, as will other buy to let lenders. Not saying it's impossible but it needs care and thought.

Lenders fees will apply. The main one of these is there arrangement fee which can be added to the mortgage.

GMS

How much are you looking to borrow?

Do you own another property?

Worth speaking to a broker as many Buy to Let lenders are broker only.

Poppy_Kennedy

Thanks im worried that no one will give me a buy-to-let given i am now part-time.

usually when you remortgage you can get a rate over the phone from your lender and be done with it, i dunno if the relationship with Nationwide and Mortgage Works would be the same.

Otherwise i am stuffed on Nationwide's mortgage

Poppy_Kennedy

Thanks GMS

yes i have a house that i live in.

i didnt realise that you would need a broker for buy-to-lets as never had one before.

i want to borrow an extra 5,000 to put a new bathroom in and cover the mortgage while its vacated.

i currently have 102,000 and would want at last 107,000

thanks

Conrad

Poppy_Kennedy wrote: »

usually when you remortgage you can get a rate over the phone from your lender and be done with it, i dunno if the relationship with Nationwide and Mortgage Works would be the same.

Otherwise i am stuffed on Nationwide's mortgage

Mortgage Works will do full underwriting as if you are a new customer so to be frank you might as well explore all the lenders and get the best deal. MW tend to not be that competitive lately.

holly_hobby

The mortgage works (for non-professional landlords) don't have a minimum earned income requirement as such (eg where some providers require a min salary of 25k), BUT they will cap borrowings at 4.25 x your personal income.

This should allow you to work out whether its worth pursing an application with TMW or considering best options (which at this point may actually be to stay where you are, given the restricted options you'll have if your income is below 25k )

As suggested, if you wish to explore options other than TMW, then a broker is your best bet, through whom you will also be allowed access to intermediary only deals.

Hope this helps

Holly

Poppy_Kennedy

Thanks Holly Hobby for that - at the moment it looks like i am best staying where i am.

I am married and my husband earns around 65,000 so i guess i shold put him on the mortgage deeds or i wonder if i can use him as a guarantor?!

thanks all

holly_hobby

Yes, you could effect a transfer of equity and add Hubby to the deeds (which could be simultaneous to the remortgage application) - but please only do this if Hubby has a clean credit record.

Obv Hubby is a higher rate tax payer, and as a married couple if you effect this on a typical joint tenancy arrangement (where equittable ownership is automatically shared between you, and transferrable on death to the survivor), HMRC will automatically deem the rental income to be equally split 50/50 between you, which is taxed at your highest rate, and obv won't be pretty for Hubby , and what we don't want ... but it may be avoided as follows.

As part of the TOE (to add hubby to deeds), you effect this under a Tenants In Common arrangement - whereby the property equittible and legal ownership may be split unequally. In this case we want to weight the ownership if your favour as the lower taxpayer, so you effect it say 99/1 in your favour.

With regards to HMRC and rental income, you complete and submit Form 17 to them ( http://www.hmrc.gov.uk/forms/form17.pdf) , which details the property equittible ownership, and which the division and reporting of rental income for tax purposes must mirror.

You then each include your divsion of rental income in your annual self assessment as normal - as thats how you mitigate the tax for married couples/civil partners - esp where one is a higher tax payer than the other.

eg - you effect the TOE under a 99/1 split in your favour.

Lets use the rent you quoted of £650 pm (lets say this is net after all deductions, just to keep the illustration simple).

Which on a 99/1 split means that your montly rental receipt for HMRC is 650/99 = £643.50pm (or £7722 pa) and Hubby reports net rental receipt of 650/1 = £6.50pm (or £78 pa).

Obv the above figs don't take account of permitted deductions etc, but are just to illusrate how the TIC arrangement works with respect to dividing and reporting of rental income. You can of course split the ownership however you decide, the above is just as an example of how you could do this.

As a side note if the property is held under TIC, there is no automatic transfer on death, which means that you can bequest your share to whomever (spouse or anyone else), if there is a vaild will in place at time of death. Otherwise its division will follow intestacy regs, which will be tsf to spouse.

No SDLT between spouses.

The equittible division has no bearing on the legal responsibilties under a joint mortgage, which is jointly and severally (ie you are both jointly and singularly responsible for servicing the mge irrespective of the actual equittible division).

You may want to effect the transfer of equity simultaneously to the remortgage conveyencing, and do it all in one hit.

Above is very basic, just to keep things simple ....

Hope this helps

Holly

Wh05apk

Have you been renting this property for 6 months?

If so Mortgage works will treat you as an experienced landlord, therefore there is no minimum income required.

Poppy_Kennedy

thanks for your response - The property has been rented since 2007