Mortgage declined

manlovestreet

I applied for a buy to let mortgage (75%) LTV) with Barclays on a property with a sale price of £95k. The mortgage application was accepted. Barclays completed a valuation survey via eSurv. First they down valued the property by £10k, from £95k to £85k. The houses on the street have sold for between £85k to ££90k. As this house was refurbished The price was fair.

Barcvlays said they were willing to lend based on the value from eSurv and eSurv requested an additional damp and timber survey (from a pca registered surveyor) which has been done. On there it highlighted some damp issues with a cost of £3.5k for the remedial work (I mentioned I was happy to carry out the work).

Now Barclays have come back and said the house is not habitable (due to the remedial work) and cannot offer a buy to let mortgage on this property. I said I can do the remedial work within one month.

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I did apply for a residential mortgage on this property initially. That survey valued the property at £95k. They were only willing to lend 25% LTV (value at £95k) as I already have a residential mortgage (£25k left to pay off).

Is the best way forward:

1. Cut my losses and find another property.
I paid £195 for the eSurv survey and a further £200 for the damp and timber survey. I have also paid £300 to the solicitors to starts the conveyancing.

2. Scrape the money together to buy the house outright.
I can potentially borrow some money from firends/family/0% interest card. Do the remedial work, than apply for the buy to let mortgage. Would Barclays lend then?

3. Apply for a buy to let mortgage with another bank.
From the current title deeds there is a mortgage on the property with RBS. Is it worth applying to them?

Thank you in advance for your help.

mcpitman

Option 1 - sometimes things are just not meant to be.


Is the house particularly special? If not give yourself more time to save up more of a deposit for another house and start from there.

foxy-stoat

If you have enough credit - buy outright, offer £75,000 - do the work and then sell it for £95,000.

Then find another property. Very much doubt that a BTL lender will agree to release 75% of the equity to pay unsecured debts.

manlovestreet

mcpitman...
Its not particularly, its just that the property is refurbished, ready to let. Have a look at the pictures, link above.
Even if I have to do the remedial work, that will take less than a few days then ready to let straight away.

foxy-stoat...
I may be able to get enough to buy outright. Will consider this.
But there isn't much work to do, apart from the remedial work. But that wouldn't justify the purchase at £75k then sell at £95k.

Why would Barclays offer a residential mortgage on the property but decline a btl with the reason being 'uninhabitable' due to the remedial work? Also they value the property for the residential mortgage at £95k but for the btl vale it at £10k less?

What are valid reasons a lender would release equity from a property, and is there any difference in buy to let v residential equity release?

kingstreet

A BTL purchase has to be in "readily lettable condition" from day one, unless you get a "light-refurb" product from one of the lenders who offer them.

manlovestreet

kingstreet
Thank you for that information.

The properties I have been looking at require some minor work, in terms of time frame one month and cost wise £3k - £5k.

Why aren't lenders willing to take into account that the cost and time is not that significant? And I could afford to make the repayment for that month as well?

If the property requires minor work but has sitting in tenants paying the rent and are signed on AST would that suffice?

foxy-stoat

manlovestreet wrote: »

kingstreet
Why aren't lenders willing to take into account that the cost and time is not that significant? And I could afford to make the repayment for that month as well?

We are not lenders, they have a business model and they have the cash (or the ability to input numbers on a computer) - their money their rules.

You could choose another lender, have you engaged a broker?

manlovestreet

I assume another lender would be following the same/similar rules as Barclays.

It would be nice to know what the actual rules are. I have asked Barclays for a copy of 'Valuation & Property Information Manual' but they have said this is an internal document only.

For future reference I should be looking at properties which are ready to let or require a 'light' refurb.

For equity release what are valid reason a lender would accept?
refurbishment?
debt consolidation?
Other reasons?

fewcloudy

manlovestreet wrote: »

I assume another lender would be following the same/similar rules as Barclays.

It would be nice to know what the actual rules are. I have asked Barclays for a copy of 'Valuation & Property Information Manual' but they have said this is an internal document only.

For future reference I should be looking at properties which are ready to let or require a 'light' refurb.

For equity release what are valid reason a lender would accept?
refurbishment?
debt consolidation?
Other reasons?

Option 4. Use a whole of market mortgage broker rather than applying directly to a lender who were maybe unsuitable for this scenario?

*Not suggesting that you don't know what you are doing, or criticizing btw*.

I often read on here that so called 'vanilla cases' trying to secure a standard mortgage could probably manage DIY. But yours does not seem like one of those cases to me. Esp your last post; that strikes me as something that would be well worth paying to get the right answers/info/lender from an experienced broker.

They might've told you that Barclays were always going to be a non-starter for this type of thing, potentially saving you £195+£200+£300 for a start... who knows.

foxy-stoat

manlovestreet wrote: »

For equity release what are valid reason a lender would accept?
refurbishment?
debt consolidation?
Other reasons?

The valid reason will be the truth. For debt consolidation a BTL lender pay not be happy with 75% level. Borrowing 75% of a properties value for refurbishment might start ring alarm bells as that is a lot of refurbishment.

Just get one you can afford and the lender is happy with.

Thrugelmir

[QUOTE=manlovestreet;74323053

For equity release what are valid reason a lender would accept?
refurbishment?
debt consolidation?
Other reasons?[/QUOTE]

That's really down to the business models of individual lenders. The majority won't simply offer mortgages. They'll have loan options for different scenarios. Mortgages as a loan type generally are for the primary purpose of property purchase. Secured loans will be offered in line with the lenders commercial practice. Reasoning behind this is that lenders run loan books top down, not bottom up.