Btl

HugoSP

Although some BTL lenders may be able to demand repayment on a whim, there are those that cannot.

However, not being able to switch to a decent mortgage deal when a fixed/variable rate ends could have the same effect.

That is why I chose a longer period tie in with a lower rate when I had the chance. It gives me a solid business model and with a comfortable LTV I know I will be making a profit on that property for the next 5 years.

As far as BTL lenders calling in loans in the light of falling markets, I mentioned on another thread that this didn't happen last time there was a crash. I should know as I was a student in a city that had both a uni and a poly. There were a huge number of student houses financed by landlords on the back of commercial mortgages/loans. I don't know of one student who had to move because the LL had to sell the house to repay the bank.

macaque_2

silvercar wrote: »

This is where you are wrong. My BTL mortgage came with a 22 page document entitled "standard terms and conditions for mortgages on residential properites". The mortgage offer itself detailed that the offer was for a let property and the borrower entitled to take tenants on an AST. That was a one page document with no nonsense about the borrower paying for valuations and the lender being able to demand repayment at whim.

This from a major high street bank, so I have no reason to believe any other high street lender would be different.

Sorry Silver car but you are wrong. I did not say that your lender would make you pay for the valuations. What I said was that if your borrower is concerned about the LTV, they will deem that a material change in your circumstances and will take measures to protect their investment.

silvercar

You said:

macaque wrote:

A BTL loan however is subject to reviews and if the LTV falls below a threshold, the lender can insist that the owner repays some of the capital.

And I am saying that the loan is not subject to reviews, that the lender will not know if the LTV falls below any threshold and they can't insist on capital repayment because it is not in my terms and conditions.


You then said:

macaque wrote:

If you look at the small print however most BTL lenders reserve the right to review the loan.

Well, I've looked at the small print and there is nothing there that isn't in residential mortgages.

macaque wrote:

lenders will pay much closer attention to the LTV and they will exercise this right.

Will they (or do you mean they "may"), that will mean breaching their own terms and conditions.

macaque wrote:

It is not a case of having a list, it is standard boiler plate for business loans

But its not standard boiler plate for all loans secured on residential properties. At least with some lenders.

Your poll now shows 11 out of 24 people have loans less than 60% value in any case.

pickles110564

carolt wrote: »

If prices can go up by 300% or more (I know plenty of properties that have gone over 500%) in the last 10 years or so, then they can just as easily drop by 50% over the same period.

Why is it some people imagine that huge price movements can only ever happen in one direction?

Wouldn't that be great? I would snap up several more BTL's, bring it on!:T :T :T :j :j :j

macaque_2

silvercar wrote: »

Well, I've looked at the small print and there is nothing there that isn't in residential mortgages.

You are missing the point. Caveats and ambiguous conditions exist in all loan agreements. The difference is that BTL mortgages are commercial loans and as such give the lenders greater freedom to protect their interests. If that means demanding that the LTV is reduced, that is what they will do. The only reason that people havn't this before is because lenders interests have not been under serious threat. Borrowers who have found themselves in difficulties have always been bailed out by rising house prices.

People never thought that mortgage offers would be withdrawn after exchange of contracts but that is exactly what is starting to happen. If you look into these cases you will probably find that trivial clauses in the agreements are being exploited to renage on the offers.

You have to recognise that a debt of £50K is a big issue to a lender and if they think that money is at risk, they won't hesitate to take pre-emptive action.

pickles110564

surely lenders only worry when you dont meet the re payments?

macaque_2

pickles110564 wrote: »

surely lenders only worry when you dont meet the re payments?

That is the general rule applied to loans for owner occupiers.

Commercial loans are different. Lenders will not hesitate to claw money back if they think the health of a business is in question.

Generali

FWIW, the CML has average LTV of BTL properties as 60%.

Then again, my LL rents to me on a residential self cert mortgage and had a deposit of 7% so wouldn't come under the CML numbers, except as an FTB (he's bought in his daughter's name).

Of course, I opened his post by mistake. My bad.

real1314

carolt wrote: »

If prices can go up by 300% or more (I know plenty of properties that have gone over 500%) in the last 10 years or so, then they can just as easily drop by 50% over the same period.

Why is it some people imagine that huge price movements can only ever happen in one direction?

well, I think that you'll find that a 50% drop from current prices over a 10 year period would be something I'd willingly bet against. What odds would you offer, bearing in mind that you think it can "easily" happen?

Give me 4-1 and I'll put up £100.

We could stick each stake in a b/soc account and the winner could take the lot. I'd go for £1k in fact. Can you match it at those odds?

Generali

macaque wrote: »

That is the general rule applied to loans for owner occupiers.

Commercial loans are different. Lenders will not hesitate to claw money back if they think the health of a business is in question.

If they bank thinks that your class of business is in trouble then the bank will call in what they can.

In the early nineties, lots of overdraft financed building companies found that their overdrafts were closed, regardless of repayment records as they were regarded as risky (trading in a bad market, no collateral).

If BTL as a business class ever looks to be in trouble, the banks will sell highly indebted LLs down the river without a second though.

Never expect a bank to have a human face. I've seen the way that they make people redundant. If they behave that way to people they've worked with for years, how will they behave towards 'some bloke'?