Mortgage broker - ask me anything

Ameba

K_S said:

@ameba I don't know how your broker has keyed in the app or packaged it , but based on the limited info in your post, I would expect Santander to ask for more evidence/queries to establish the longevity of the contract. As long they are asking questions, it's a good sign

Thanks @K_S ! I wasn't able to get in touch with the broker before the long weekend and now this contract matter is bothering me! 
With three months left on the current contract, what are they likely to ask for? All was indicated on the application but they haven't asked for anything other than payslips as yet. 

euanovsky

I'm hoping to get my first BTL via a SPV. I have a few questions if you don't mind:

I'm hoping to use a mortgage broker. Can I use the mainstream ones like L&C or Habito or do I need to go to a specialist? I have previously used both fee paying and free brokers for my own residential mortgage and found them to be fairly similar but not sure if a a BTL with a SPV is worth justifying using a fee paying broker.  If you have recommendations for a mortgage broker (and are allowed to give them!) would be interested to know

Do I need to engage with a broker prior to making an offer? From my research I don't think there is really an AIP step for SPV BTL vs a normal residential mortgage say?

Is there a minimum valuation/loan amount required? Say if the property I'm looking at is say at £75k. After 30% deposit my loan amount will then be £52.5k - is that too little?

As long as I can put in the 25% or 30% deposit is the affordability criteria solely based on rental income (so the usual say 4x salary as the max loan value doesn't apply)? I am aware some of the lender requires a personal guarantee but most seems to require a minimum salary of just £25k a year. Does that mean someone who is on £25k p.a. can get a BTL at £1m as long as they can put down say £300k for deposit?

Thanks

Fkhan95

Hi,
We’re anticipating a mortgage offer for a property we’ve offered 385k on. Lender’s (Accord) Valuation has come back with a valuation of 380k in its current state, with a valuation of 385k if “essential repairs” carried out.
Two questions regarding the situation:
1) If Accord provide us with a mortgage offer, what are the different stipulations they may impose - Get work done upfront/retention(?)/offer 380k instead of full amount etc 
 2)  What is Accord policy with regards to changing property once offer is issued - would we have to go through a full application again or is it a case of editing property details as long as within original mortgage offer price?

Thank you. 

K_S

euanovsky said:

I'm hoping to get my first BTL via a SPV. I have a few questions if you don't mind:

I'm hoping to use a mortgage broker. Can I use the mainstream ones like L&C or Habito or do I need to go to a specialist? I have previously used both fee paying and free brokers for my own residential mortgage and found them to be fairly similar but not sure if a a BTL with a SPV is worth justifying using a fee paying broker.  If you have recommendations for a mortgage broker (and are allowed to give them!) would be interested to know

Do I need to engage with a broker prior to making an offer? From my research I don't think there is really an AIP step for SPV BTL vs a normal residential mortgage say?

Is there a minimum valuation/loan amount required? Say if the property I'm looking at is say at £75k. After 30% deposit my loan amount will then be £52.5k - is that too little?

As long as I can put in the 25% or 30% deposit is the affordability criteria solely based on rental income (so the usual say 4x salary as the max loan value doesn't apply)? I am aware some of the lender requires a personal guarantee but most seems to require a minimum salary of just £25k a year. Does that mean someone who is on £25k p.a. can get a BTL at £1m as long as they can put down say £300k for deposit?

Thanks

@euanovsky Quick thoughts -

- Ltd.co. BTL mortgages aren't specialist anymore so you could in theory use volume brokers as well if your circumstances and property are standard.

- Before making an offer I would recommend getting in touch with a broker and running your ballpark figures past them to get a realistic idea of your options and the costs involved.

- There are minimum loan sizes depending on the lender ranging from 25k to 100k.

- Generally speaking, for ltd.co. BTL mortgages, the maximum loan size will be based on estimated rental income, LTV caps and how long you are willing to fix for (crudely speaking, the longer the fix, the more you may be able to borrow)

K_S

Fkhan95 said:

Hi,
We’re anticipating a mortgage offer for a property we’ve offered 385k on. Lender’s (Accord) Valuation has come back with a valuation of 380k in its current state, with a valuation of 385k if “essential repairs” carried out.
Two questions regarding the situation:
1) If Accord provide us with a mortgage offer, what are the different stipulations they may impose - Get work done upfront/retention(?)/offer 380k instead of full amount etc 
 2)  What is Accord policy with regards to changing property once offer is issued - would we have to go through a full application again or is it a case of editing property details as long as within original mortgage offer price?

Thank you. 

@fkhan95

- With a down-val, if it affects the product LTV, Accord will inform the broker of the same and ask them what the client wants to do

- Generally speaking you won't need to go through a full application. The broker should be able to take back control of the case and do the needful.

Fkhan95

K_S said:

Fkhan95 said:

Hi,
We’re anticipating a mortgage offer for a property we’ve offered 385k on. Lender’s (Accord) Valuation has come back with a valuation of 380k in its current state, with a valuation of 385k if “essential repairs” carried out.
Two questions regarding the situation:
1) If Accord provide us with a mortgage offer, what are the different stipulations they may impose - Get work done upfront/retention(?)/offer 380k instead of full amount etc 
 2)  What is Accord policy with regards to changing property once offer is issued - would we have to go through a full application again or is it a case of editing property details as long as within original mortgage offer price?

Thank you. 

@fkhan95

- With a down-val, if it affects the product LTV, Accord will inform the broker of the same and ask them what the client wants to do

- Generally speaking you won't need to go through a full application. The broker should be able to take back control of the case and do the needful.

Thank you very much!

NewToThis2021

Hi everyone, some guidance on offers from Santander please...

If Santander is unable to offer the full amount, is it a straight no or do they provide and alternative?

If an alternative is offered, would it include a different product e.g 5yr fixed instead of 2yr  (I note on the intermediary calculator different values are available if a 5yr product) or would it just be a lower LTV. 

Many thanks in advance. 

euanovsky

K_S said:

euanovsky said:

I'm hoping to get my first BTL via a SPV. I have a few questions if you don't mind:

I'm hoping to use a mortgage broker. Can I use the mainstream ones like L&C or Habito or do I need to go to a specialist? I have previously used both fee paying and free brokers for my own residential mortgage and found them to be fairly similar but not sure if a a BTL with a SPV is worth justifying using a fee paying broker.  If you have recommendations for a mortgage broker (and are allowed to give them!) would be interested to know

Do I need to engage with a broker prior to making an offer? From my research I don't think there is really an AIP step for SPV BTL vs a normal residential mortgage say?

Is there a minimum valuation/loan amount required? Say if the property I'm looking at is say at £75k. After 30% deposit my loan amount will then be £52.5k - is that too little?

As long as I can put in the 25% or 30% deposit is the affordability criteria solely based on rental income (so the usual say 4x salary as the max loan value doesn't apply)? I am aware some of the lender requires a personal guarantee but most seems to require a minimum salary of just £25k a year. Does that mean someone who is on £25k p.a. can get a BTL at £1m as long as they can put down say £300k for deposit?

Thanks

@euanovsky Quick thoughts -

- Ltd.co. BTL mortgages aren't specialist anymore so you could in theory use volume brokers as well if your circumstances and property are standard.

- Before making an offer I would recommend getting in touch with a broker and running your ballpark figures past them to get a realistic idea of your options and the costs involved.

- There are minimum loan sizes depending on the lender ranging from 25k to 100k.

- Generally speaking, for ltd.co. BTL mortgages, the maximum loan size will be based on estimated rental income, LTV caps and how long you are willing to fix for (crudely speaking, the longer the fix, the more you may be able to borrow)

Thanks K_S - appreciate you taking time to answer my questions!

euanovsky

K_S said:

Fkhan95 said:

Hi,
We’re anticipating a mortgage offer for a property we’ve offered 385k on. Lender’s (Accord) Valuation has come back with a valuation of 380k in its current state, with a valuation of 385k if “essential repairs” carried out.
Two questions regarding the situation:
1) If Accord provide us with a mortgage offer, what are the different stipulations they may impose - Get work done upfront/retention(?)/offer 380k instead of full amount etc 
 2)  What is Accord policy with regards to changing property once offer is issued - would we have to go through a full application again or is it a case of editing property details as long as within original mortgage offer price?

Thank you. 

@fkhan95

- With a down-val, if it affects the product LTV, Accord will inform the broker of the same and ask them what the client wants to do

- Generally speaking you won't need to go through a full application. The broker should be able to take back control of the case and do the needful.

Thanks - if I may, three follow-up questions:

I'm hoping to set up the SPV such that my OH and me will be 50/50 shareholder but I will be the only director (as I will be the one running it day to day). Will this cause any issues? I am aware only directors need to provide personal guarantee and lenders typically would like persons with significant control to be directors too - is that right?

Alternatively I have a LTD for my side hustle (in addition to my full time job). If I set my LTD to be the director of the SPV (and have the LTD and my OH as 50/50 shareholder) would it make it more difficult to obtain a mortgage? The reason for this is I am hoping to use my LTD to make an intercompany loan to the SPV.

One other alternative structure is to set up a holding company where both the SPV and my LTD sits (my accountant suggests that for some tax reason). Again will this cause any issues regarding getting a mortgage as now there's a parent company to the SPV?

My accountant thinks all three structures are possible but I'd just like to see if it will make obtaining a mortgage more difficult?

K_S

euanovsky said:

K_S said:

Fkhan95 said:

Hi,
We’re anticipating a mortgage offer for a property we’ve offered 385k on. Lender’s (Accord) Valuation has come back with a valuation of 380k in its current state, with a valuation of 385k if “essential repairs” carried out.
Two questions regarding the situation:
1) If Accord provide us with a mortgage offer, what are the different stipulations they may impose - Get work done upfront/retention(?)/offer 380k instead of full amount etc 
 2)  What is Accord policy with regards to changing property once offer is issued - would we have to go through a full application again or is it a case of editing property details as long as within original mortgage offer price?

Thank you. 

@fkhan95

- With a down-val, if it affects the product LTV, Accord will inform the broker of the same and ask them what the client wants to do

- Generally speaking you won't need to go through a full application. The broker should be able to take back control of the case and do the needful.

Thanks - if I may, three follow-up questions:

I'm hoping to set up the SPV such that my OH and me will be 50/50 shareholder but I will be the only director (as I will be the one running it day to day). Will this cause any issues? I am aware only directors need to provide personal guarantee and lenders typically would like persons with significant control to be directors too - is that right?

Alternatively I have a LTD for my side hustle (in addition to my full time job). If I set my LTD to be the director of the SPV (and have the LTD and my OH as 50/50 shareholder) would it make it more difficult to obtain a mortgage? The reason for this is I am hoping to use my LTD to make an intercompany loan to the SPV.

One other alternative structure is to set up a holding company where both the SPV and my LTD sits (my accountant suggests that for some tax reason). Again will this cause any issues regarding getting a mortgage as now there's a parent company to the SPV?

My accountant thinks all three structures are possible but I'd just like to see if it will make obtaining a mortgage more difficult?

@euanovsky Quick, general thoughts -

Scenario 1 - Generally speaking, you can expect both yourself and OH to need to go on the application.

Scenario 2 - Yes, it will make it significantly harder if one of the shareholders of the SPV was a corporate entity. Generally speaking, you do not *need* that structure to be able to make an intercompany loan to the SPV (your accountant will confirm that). An intercompany loan from the client's trading co. to the SPV is a common way of funding the deposit with the right lender.

Scenario 3 - I'm not an accountant so I may have misunderstood what you suggest. But from what I understand, very very generally speaking, that doesn't seem very different from Scenario 2 as the holding company will usually be a shareholder in the subsidiary companies.

From a BTL mortgage point of view the most widely accepted structure is a Ltd.Co.SPV which has no other activities and with individual shareholders.