TL purchase - completely different recommendations by two brokers!

Stebani

Hi, I have salaried+rental income, my partner has solely dividend income. We are looking to make a BTL purchase in the South East (high value, low rent) and went to a local broker who recommended a 3.39% Precise 75% LTV 5-year fix product as he said the projected rent was insufficient to get a better deal than that with other lenders.

It seemed a bit high so we got a second opinion from one of the brokers recommended by MSE, they came back with a 2.17% 75% LTV 5-year fix from Barclays.

The fees on both are similar, different by about £200.

They are both whole of market and have seen the exact same information (I literally forwarded on the same email with our income proof, etc), within 2 days of each other so I'm a bit surprised as to how they could be so different? When I mentioned this to the second broker, he said the first one probably didn't consider "top-slicing" which is something to do with income.

To the brokers on the board- any ideas why the two recommendations might vary so much?

[Deleted User]

I'm with the 2nd broker. Barclays can lend insane levels on BTL with top slicing.

Unless there is more to it, precise sounds like the lazy recommendation. Or at least a recommendation from someone that needs to learn a bit more about BTL before advising on it

chunkytfg

Trying my best not to de-rail the thread..... Whats top-slicing? Not seen it mentioned before?

[Deleted User]

Lenders need a certain rental income to class the loan as affordable. If the rent isn't enough they just won't lend. They rarely base the lending decision on personal finances. The BTL is expected to be self financing.

Some lenders have lenient calculations so will lend more for the same rent

Some lenders have tight calculations but if the number isn't met they will use disposal income from personal finances to make up the difference.

So if 150k needs £450 rent but the valuation says only £400 is achievable :

Most lenders will just decline the case or limit the loan
Some will lend as calculators are more lenient (these tend to be more expensive)
Some will see if the clients personal finances can take a £50/m mortgage payment to make up the difference.


It can be useful if the rent is low compared to the property value. Quite common in areas where the landlords are banking on high capital growth rather than making money off the rent

chunkytfg

Deleted_User wrote: »

Lenders need a certain rental income to class the loan as affordable. If the rent isn't enough they just won't lend. They rarely base the lending decision on personal finances. The BTL is expected to be self financing.

Snip....

Perfect thank you. :beer::beer::beer::beer:

Mortgage_Adviser

Ask the broker who recommended Precise why they didn't recommend Barclays. There may be something in Barclays criteria that one broker has spotted but the other hasn't that makes you unelegible to get it with Barclays.