Can't find a lender

M_e

ACG wrote: »

Who was the lender?

Coventry (For some reason I have to add extra writing because just saying "Coventry" is too short a post)...

ACG

Just checking it wasnt who i had in mind.

Unfortunately im not allowed to say the names of lenders as it could be seen as leading, but there are 1 or 2 who may consider it. I think you need to speak to a broker though.

M_e

Caladan wrote: »

The basics -
High LTV (90%) = High risk
Only 1 years accounts = High risk.

Coventry informed me they are a low risk lender which is why they don't lend for Studio flats. This is why it's confusing. All lenders talk differently about different things. Some say one thing is low risk, others say it is high risk. Coventry have said that lending based on 1 years accounts is low risk and that 90% LTV is low risk, but lending to buy a studio is high risk (despite the estate agents suggesting that it is in fact low risk). It feels like they make it up as they go along to suit themselves

Caladan wrote: »

As to the fact your rent is currently higher than the Mortgage payments, this is entirely irrelevant.

I don't understand why though. If I can afford £30,000 in Rent over 3 years (on a lower income, with proof that I've never missed a payment), why can't I afford £13,000 - £14,000 in mortgage payments over the same period of time with a much higher income? Income increases, outgoings decrease, yet I'm still told I can't afford it? Am I missing the logic?

Caladan wrote: »

In fact, the effects of the recent Mortgage Market Review (MMR) rules will make it even harder as lenders need to go through everything with a fine tooth comb. The actual impact of this is yet to be seen as it only came into place this week, although I have already seen an increase in declined Mortgage applications.

Yes I was aware of the changes coming into effect, and told by Coventry that as long as I phoned back before the changeover date I could adopt the previous (already ridiculous) criteria. Unfortunately for me they stupidly adopted the new criteria at the beginning of April and forgot to phone to warn me... Not that it really matters as they've now told me they don't lend to buy studio flats.

Caladan wrote: »

Also note that the 'saving' in your monthly payments is somewhat mitigated by the added costs of home ownership. Insurances, maintenance, ad-hoc incidentals and so on. Trust me, you wont actually be £450 better off.

Whilst I do agree that there will be some very minimal yearly expenses to maintain a studio flat. I don't think for one minute the expenses will be enough to even mention. My parents have been homeowners for almost 30 years and have assured me that even maintaining their 4 bed semi isn't that expensive. Or even their property in the south of France. Let alone a tiny studio flat with 1 window.

Caladan wrote: »

The biggest red flag though, is that you don't actually have a deposit at all. What you have is a lender putting up £10k of the purchase price and you are asking another lender to put up the rest, leaving almost all of the risk with the lenders and very little of it with you. I don't know many lenders if any that would accept funds from a loan as the deposit. I also shows no track record of you being able to save and therefore prepare for the unknown.

I think you realised somewhere below that the loan isn't in my name. But to answer the part about not being able to save. How do you suppose someone who can't live with their parents saves for a deposit when renting is more expensive than a mortgage? Not only is it more expensive but its money down the drain each month. My previous landlord increased my rent by 20% with 4 weeks' notice. This put my rent at over £1,000 a month for 2 bedrooms. My new landlord is actually one of my clients so I get my rent at a discount. As said before I would be saving £400-£450 a month (less the cost of maintaining a 5.5m x 4.5m studio flat)

Caladan wrote: »

It sounds harsh, but I think you're over-stretching yourself by aiming to buy right now. Let your business build up over a couple of years, take stock of what you can afford on a steady self employed income, show a track record of being able to save for yourself and think about it again then.

In 2+ years' time property prices will have increased and the amount of mortgages given to people will have decreased. Things are only going to get worse for first time buyers. Is showing that you can save money part of the new criteria? I've never been told I have to prove I can save money.

Caladan wrote: »

Edit: Sorry I miss-read the bit about the loan being in your name. The lender would require some form of guarantee that it is NOT money being loaned to you with an obligation to repay. Since you're making repayments this wouldn't be the case. If you told the lender you didn't have to repay it when you actually did then you're breaching your own obligations to both the lender and your creditor (company or private individual) which opens a whole new can of worms.

How would the lender know about the loan if it's not in my name? Or are you saying if I admitted to the lender I had a loan for a deposit? Legally I'm not committed to pay it and I have no agreement with my parents. Should they for some reason want to include it as part of my expenditure I would just draft a letter with my parents saying that the money does not have to be repaid.


Edit: I just realised you said I could write a letter saying I don't have to repay the money

M_e

CKhalvashi wrote: »

Offer a years rent plus deposit, and you will be able to let through an agency.

I dealt with a BR situation where this was offered, so there should be no issue there.

CK

If I can't find a lender I might consider that, although I will find a lender


Out of curiosity, what happens if the agency goes bankrupt? Is the money protected in the same way it is if a bank goes under?

M_e

ACG wrote: »

Just checking it wasnt who i had in mind.

Unfortunately im not allowed to say the names of lenders as it could be seen as leading, but there are 1 or 2 who may consider it. I think you need to speak to a broker though.

I'll speak to a broker thanks.


Are you not even allowed to pm me the lenders who might lend based on 1 years' SA302?

Funny_old_game

The fact is here the poster has 3 years figures not one year from the first post.

No specialist lender needed, they probably have very low declared income in the first two years, hence why lenders want 3.

If the income has been going up, great, just make sure it goes up more ready to buy in the summer next year.

Your energy to get a loan is good but set your expectations also that it may not happen.

Alphamare

Why don't you move in with your parents for a year or two and save a deposit yourself.

CKhalvashi

M_e wrote: »

If I can't find a lender I might consider that, although I will find a lender


Out of curiosity, what happens if the agency goes bankrupt? Is the money protected in the same way it is if a bank goes under?

The deposit legally must be protected, and all of my tenant money was held in a client account and withdrawn monthly, with most reputable agents doing this.

I'm no longer a landlord.

CK

GMS

How were you planning on declaring the source of the deposit to a lender?

When did you tell them you started trading?

M_e

TheCyclingProgrammer wrote: »

I think you're going to find that most lenders wont accept your deposit as it's a loan, regardless of it not being in your name. Whomever has borrowed that loan has now loaned it to you or you wouldn't have it.

As said to someone else, I appreciate that most lenders won't accept it as a deposit, but the lenders won't be informed. Think of it as my parents taking out a loan to give me the money I need for a deposit as a present. The money is actually secured against their house and is incredibly low interest (it is all in their name).