Advice for buy to let mortgage for first time buyers

Retired_Mortgage_Adviser

If your broker is telling you that you can't get a BTL mortgage just because you aren't an owner occupier, you need to get in touch with a different broker. All it means is that the section of the market you can expect to get a mortgage from is significantly reduced, but (by itself) does not mean no one will lend to you.

Barclays, Clydesdale and Kensington are the ones that come to mind straight away but this sector has evolved a lot over the last 1-2 years so there might well be more non high-street lenders that consider this scenario.

The bigger the deposit, the better your chances of getting a mortgage. For non owner-occupiers, you will come across minimum income requirements (usually 30k). If you have a decent salary income, that's an additional plus, especially with lenders like Barclays who are happy to use top-slicing to meet affordability calcs.

Of course, tf there are other reasons in the background, then that's another matter.

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I would not recommend going lender by lender, what you need is a specialist BTL broker.

amanda_p

My son got a BTL mortgage on his first property but his circumstances are very different.He lives and works in Hong Kong and wanted to get on the property ladder over here.
It was very difficult and he had to go to a specialist broker, which wasn't cheap.Nat West who he has banked with gave him a MIP and then withdrew at the last moment as apparently they didn't do BTL mortgages for anyone overseas.It took them 4 months before they decided this.
Eventually the broker got him one through Skipton Building Society. The rate was higher than a normal BTL but it all worked out in the end, he has had it over  3 years with no void periods.
I would however be very wary of High Street Banks regarding what they say they will do, to what they actually do.

a.ahmed0162

Yeah so I did try a couple of brokers one of them being L&C and both refused because they said I needed to be an existing land lord to do a buy to let, but when we approached our Barclays branch who did the affordability test and said we were eligible to apply and he can’t see why it would be refused, he also got confirmation from the underwriter that I don’t need to own a residential property as it was something they used to stress a few years back, am just worried now that I can’t afford the mortgage on a residential basis but do meet the criteria for a BTL 

Retired_Mortgage_Adviser

That must be Skipton International expat BTL mortgages.

Skipton UK lends to First Time Landlords only if they have owned their own residential property in the UK for a minimum period of time and doesn't lend to expats.

Retired_Mortgage_Adviser

a.ahmed0162 said:

Yeah so I did try a couple of brokers one of them being L&C and both refused because they said I needed to be an existing land lord to do a buy to let, but when we approached our Barclays branch who did the affordability test and said we were eligible to apply and he can’t see why it would be refused, he also got confirmation from the underwriter that I don’t need to own a residential property as it was something they used to stress a few years back, am just worried now that I can’t afford the mortgage on a residential basis but do meet the criteria for a BTL 

L&C/Habito types are (usually) useless for these sort of things, unless you get a really good broker. You would be best off with a specialist BTL broker.

[Deleted User]

Retired_Mortgage_Adviser said:

L&C/Habito types are (usually) useless for these sort of things, unless you get a really good broker. You would be best off with a specialist BTL broker.

To be fair to these companies (not that they deserve it that often) it is probably their headline compliance department that has made the rules.   When i worked for Countrywide we werent allowed to do any ftb btl at all under any circumstances.    The broker may know exactly who to go to but not be allowed to do it. 

Retired_Mortgage_Adviser

Deleted_User said:

Retired_Mortgage_Adviser said:

L&C/Habito types are (usually) useless for these sort of things, unless you get a really good broker. You would be best off with a specialist BTL broker.

To be fair to these companies (not that they deserve it that often) it is probably their headline compliance department that has made the rules.   When i worked for Countrywide we werent allowed to do any ftb btl at all under any circumstances.    The broker may know exactly who to go to but not be allowed to do it. 

Absolutely.

@Deleted_User And that reminds me , this is what I meant (admittedly poorly worded  ) by suggesting that the OP go to a "small broker" on another thread.

I think the question was whether lenders will allow releasing funds for investment purposes. Bigger firms usually has inflexible compliance regimes which don't allow the broker to place such cases even if it were possible.

And I don't know if you heard, Habito just landed a $25m funding round last week, so their subsidized loss-making broking operations will likely be around for a good few years longer! Good for customers, not so good for our fellow brokers in the industry who have to run a profitable operation!

AdrianC

a.ahmed0162 said:

Lover_of_Lycra said:

How much rent will this £500k property achieve and do you have £15k on top of your deposit for the SDLT? 

So am looking at a rental value of 1700-1900

That's a raw yield of 4% before the mortgage monkey gets fed.

But even if you manage to borrow £375k at 3.5%, that's £1,100 of interest alone per month (a repayment mortgage is going to be the thick end of £1,900/mo). Your return on your £500k investment is now 1.4%. Before tax, obvs. And it's going to take you 17 months before you see one single penny, just through covering the £10k FTB SDLT bill.

And that's before any other costs. Service charge and ground rent? Maintenance? Buildings insurance? Voids? Bad debts?

Honestly, have you actually worked the numbers? This is a mediocre idea (at best) on so many levels.

and we have the SDLT which is no issue 

Don't forget that you'll be paying the +3% as and when you buy your own home in the future, as well as having lost your FTB benefits.

Retired_Mortgage_Adviser

AdrianC said:

But even if you manage to borrow £375k at 3.5%, that's £1,100 of interest alone per month (a repayment mortgage is going to be the thick end of £1,900/mo).

Not opining on whether it's a good investment or not (need lots more info for that) but that mortgage rate is well on the higher side. At  75% LTV

2 year Barclays (who do lend to FTL non-homeowners) fix is 1.7%+fees, or 1.91% on a total cost basis.

5 year Barclays fix is 2.13%+fees or 2.22% on a total cost basis.

landlordspv

a.ahmed0162 said:

Yeah so I did try a couple of brokers one of them being L&C and both refused because they said I needed to be an existing land lord to do a buy to let, but when we approached our Barclays branch who did the affordability test and said we were eligible to apply and he can’t see why it would be refused, he also got confirmation from the underwriter that I don’t need to own a residential property as it was something they used to stress a few years back, am just worried now that I can’t afford the mortgage on a residential basis but do meet the criteria for a BTL 

Barclays are very good for renter Landlords and also consider earned income to beef up affordability, which is often important when investing in London / South East.