Buy-to-Let Mortgages on Low Value Properties

supraman

I recently attempted to get buy-to-let mortgages through Virgin Money for 2 unencumbered (i.e. no mortgage) properties that I own.


Unfortunately, Virgin will only lend on properties that are worth more than £40,000, and their surveyors assessed my properties at £36,000 and £38,000.


I have investigated many lenders and the only one I've found that doesn't specify either a minimum property value or a minimum loan value is the Clydesdale Bank. Unfortunately, I already have 3 buy-to-let properties with them, and that is their maximum.


Does anybody know any other lenders that will consider my properties? They are in Scotland and, in my area at least, there are many properties that are valued below £40,000, which is actually the lowest threshold that I've been able to find.


Many thanks in advance.

ACG

Are any of the other 3 valued at more than £40k?
You could raise a mortgage against them using another lender and then use clydesdale for the new one?

supraman

ACG wrote: »

Are any of the other 3 valued at more than £40k?
You could raise a mortgage against them using another lender and then use clydesdale for the new one?

Thanks for taking the time to reply.


I did think about that and, yes, all the other properties are valued at more than £40K. However I only took out those mortgages fairly recently so there would be early repayment charges. Also, these are offset mortgages so it actually suits me to have them on higher value properties because it gives me a larger offset facility.


It would be ideal if I could find any other lender that would consider my properties.

Amara

Out of curiosity, OP: how do you feel about buying and renting cheap properties? Is it worth it for you? There're mixed opinions on this subject on the forum.

supraman

Amara wrote: »

Out of curiosity, OP: how do you feel about buying and renting cheap properties? Is it worth it for you? There're mixed opinions on this subject on the forum.

I haven't read the posts on the forum on this subject. What are the negative opinions?


In my experience and in my location, lower value properties tend to generate proportionally larger profits and, of course, they require a lower deposit. I would certainly rather have two properties at £40K than one property at £80K.


Of course, the one downside that I've experienced is trying to get mortgages for the very lowest value properties; hence this thread.


Unless I'm missing something fundamental, I find it very strange that there are so few lenders who are willing to lend on low value properties. At the moment, many banks are offering very low interest rates on unsecured personal loans of up to £25,000, so why are they so reluctant to offer similar size secured loans on buy-to-let properties? Assuming a 75% loan-to-value (LTV), I'm looking for a £27,000 secured loan on my lowest value property. Surely secured is better than unsecured for a lender's perspective?


The lenders that I've spoken to have talked about "greater risk" (in vague, not specific, terms) with lower value properties but surely it's less risky to deal with properties that are generating proportionally larger profits?

Amara

Perhaps because cheap properties are on areas, where there's less jobs? Also these areas often have opinions of being rough.