BTL mortgage declined due to unlettable state - first we'd heard of the criteria

mortgagewoes

Hi there,

This is a bit of a long one - I hope someone can advise!

A few days ago we had a BTL mortgage application to Virgin Money declined and the reason given was that the property is not in a lettable state.

This was frustrating as we *knew* that the property isn't in a lettable state (it needs a new kitchen, central heating, and redecorating), and we have costed out, with contingency, the works needed. The issue is that (as far as I can recall) I was never informed that this was part of VM's standard lending criteria before applying for the mortgage, and in all the documentation I was sent I can't see it either. So £600+ down the drain on survey/application fee which we would never have paid had we known about the criteria.

After complaining about this we received a call from VM stating that they have gone through the call records and that in the first call this criteria of lettability was in fact mentioned. I've asked for the audio recording as proof and am waiting - they claim they are only allowed to give out the transcript which I'm uncomfortable with as it's easily amended, but we'll see.

The plot thickens, though. My original discussions with VM were for a joint mortgage application with my wife. The mention of lettability (if in fact there was one) was on one of these original calls.

However, before applying for the mortgage, we decided for tax reasons that the property and mortgage would be entirely in my wife's name, and so had a *new* decision in principle generated generated with my wife over the phone. My wife then sent in the application form, along with a letter of authority so I could deal with the account on her behalf.

A few of questions:
1. If VM didn't mention the "lettability" criteria do we have a hope of getting our valuation and/or application fee back?
2. If VM *did* mention the criteria but mentioned it only to me, about the original join decision in principle, and didn't mention it to my wife who actually made the application, do we have a hope of getting our fees back?
3. If we keep pursuing this and annoy a mortgage company like this, are we likely to get a black mark on some "record" that may hinder our ability to get a mortgage with a) them, or b) with someone else in the future? In short - is it worth pursuing or should we suck up the £600 loss and move on?

Thanks a lot for your help!

kingstreet

"Readily lettable condition" applies to pretty much every BTL mortgage, unless the lender is prepared to accept an element of light refurb and that is reflected in the title/name of the product.

As you went direct, you're going to have to sort this out with the lender and we have no way of knowing what you were told.

There is no hitlist you will be on for arguing your point.

amnblog

Any lender can decide a property is not suitable security.

Be careful before you spend any more money on this mortgage application as you a likely to get a similar response elsewhere.


You may well need specialist lending until the property is habitable.

Thrugelmir

Common sense should apply. Basic requirement of any mortgage product is that the property should at least be habitable. This provides the lender with adequate security, and forms the basis on which the loan will be commercially priced. Once outside these boundaries then different terms will apply along with a different product.

ACG

Youve applied for a BTL mortgage... as it stands it cant be let.

YOU should be bringing to the attention of the lender anything that brings the application out of the ordinary. They can not possibly cover everything off that they would not allow, they can only try to cover off some of the more common issues.

Theyre a reputable lender, they are not going to amend the transcript for the sake of £600, if they were caught doing that then they would be fined a fortune.

Put a complaint in if your not happy and see what they come back with but im not sure how likely they are to refund it. If you did go through a broker then I think you need to take this up with the broker as to why it was never picked up on - but I dont think you did going off what you have said.

In terms of moving forward - depending on the state of the property you may get away with a light refurb BTL mortgage (typically if it needs a bit of tarting up to make it habitable). Otherwise you are looking at Bridging Finance with a BTL to pay that off once the work is complete - one thing to ensure is if you are applying for a BTL you make sure they are aware they will be paying off a bridging loan - not all lenders like to do that.

mortgagewoes

Thanks all for the advice.
We're going to let the property go as a refurb mortgage is prohibitively expensive.
Lesson learned!

tvfreek

Its a real pity you had to go through this - a two minute call with a competent broker would have highlighted this issue.

Best of luck for the next one!

ACG

Assuming you aredeclaring the income, the interest rate/fees should not matter too much as they can be used to offset the tax you pay.

Get proper advice on the mortgage and tax situation.