BTL with light refurbishment

utab007

Dave,

Due to the condition of the property it's possible the lender may refuse?

So I want to know what my options are to move forward from here?

I think ideally some kind of BTL refurb product. Which lends on based on rental income and release say 80% to start with and then the remaining amount after work is completed.

I think a bridging loan would be more costly. Can anyone recommend any suitable products for BTL refurb? Any other options I can consider?

Thanks

dimbo61

In 2010 we found a property unchanged from the 1940,s and we had a lender who not only gave us a 100% mortgage but also lent us another 20% on top to completely refurbished the property which we did in 12 weeks, They took a second charge on our home which we had a huge amount of equity in.
The personal account manager from the bank was on site before, during and after the refurbishment.
We had tenants in within a week of the refurb.
They also lent us another advance to add an extension after we Won planning permission and again we had on site visits during the build.
It can be done if you find the right lender.
Our yield is about 10%

Dave_Ham

On these numbers getting the optimum product will obviously make a big financial difference.

An experienced broker would probably be able to look at the pictures and have a good idea whether light refurb or standard buy to let

Having functioning kitchen and bathroom is imperative

Light refurb could be a slightly more expensive solution although not that of bridging

Two bigger issues remain whether you want to accept them or not. You need to ensure the lender rental calculation is met and as I said a lender may not like the plausibility of the case

If you do not own and occupy a significantly valued property, lenders may take a view that you do not intend to rent the property and reside there instead. This is further complicated by your income not being sufficient to raise said amount on a residential basis..

Best of luck

utab007

The house has a functioning kitchen and bathroom. Everything is just dated.

In 2006 I took out a BTL on a property in worse condition than this and had no problem securing the house. That was with Cheshire BS

There must still be some lenders out there who will consider BTL on properties that require a light refurb. I've heard BM valuers are more flexible compared to others.

Dave_Ham

I'm not sure if you are asking or telling

Without sounding like a broken record, you won't even get to a valuation with BM due to their fear of you living there

I am not scaring without substance, BM and most lenders are going to want to know where you live, why you are potentially buying a more expensive property as an investment property

Get some professional formal advice and without being patronising you need to stop justifying your position and thinking you have half an idea as we do this all day every day and therefore rely upon a professional

I still think there are a lot of potentially damaging variables and by the sounds of it, the valuation of the property would not be my primary concern.

All the best

utab007

Dave,

I have discussed this with two mortgage brokers. Initially the second broker had similar concerns to you, but after some research thinks it will come down to my credit score.

Yes, my existing residential property is worth less than my investment property. I would say approx £575k. What's wrong with me buying an investment property worth more than my current home? I am happy for them to make any checks on who lives there. I appreciate some people play the system, so they would want to check.

Thanks

Dave_Ham

Lenders have a lot of stats from the hey days and a stupidly high percentage of people who took buy to let's at more than their residential property value were on the voters roll when they checked at the buy to let address

This is heightened when the proposed borrowing would be outside of lending limits on a residential.

I don't make the rules, but do be really aware this is going to come up..

GMS

Plausibility is a huge part of underwriting, especially with BTL.

As BTL is driven by rent the required earned income varies buy typically 25k. When somebody wants to buy a property 'better' than their residential to let out the plausibility checks kick in.

If affordable on a residential mortgage then plausible. If somebody earned 25k and wanted a BTL property worth 700k with a 500k mortgage the underwriters would throw it out most likely. Earned income nowhere near enough to justify a mortgage so would the BTL be a back door residential.

In your case you intend to live there in the future so could be argued regulated on day 1 as intention is there. How would you get the mortgage to a residential one of your income is not sufficient?

You have been given good advice here which you seem intent oon arguing.

The broker who told you it will come down to credit score is a clown. You could pass credit score and be declined for many reasons.

If you really want to pursue it find a decent broker and expect to be asked to provide plenty of information to back up your story. Only proceed if a broker has referred to the lender BDM and had the nod to proceed.

utab007

That's fine. Are you saying my application will be refused when it comes up?

utab007

GMS

I wasn't arguing. I was questioning to understand better.

What is lender BDM? How do I know if the broker is any good? You clearly don't think much of the two brokers I'm currently in discussions with. Both are qualified, but I guess that doesn't count for much

Thanks