Mortgage broker - ask me anything

manlovestreet

Hello

I have a buy to let property, which I purchased cash (from savings) outright 4 years ago. I now wish to remortgage with a btl interest only mortgage to release funds on a 75% ltv. I have no outstanding debt and good credit. The property has tenants on 6% rental yield with the rent covering more than then 145% stress test. What proof do i need to show, if any,for the rental income? It is on a standing order to my bank account.

Are some lenders more inclined to lend to people who wish to release funds rather the transfer a mortgage from another lender?

Any other advice related to the above would be appreciated.

K_S

manlovestreet said:

Hello

I have a buy to let property, which I purchased cash (from savings) outright 4 years ago. I now wish to remortgage with a btl interest only mortgage to release funds on a 75% ltv. I have no outstanding debt and good credit. The property has tenants on 6% rental yield with the rent covering more than then 145% stress test. What proof do i need to show, if any,for the rental income? It is on a standing order to my bank account.

Are some lenders more inclined to lend to people who wish to release funds rather the transfer a mortgage from another lender?

Any other advice related to the above would be appreciated.

@manlovestreet Should be fairly straightforward based on the limited info in your post. The exact proof required for the rental income (if any) will depend on the specific lender and lenders will have different policies about which value they use for the stress test - actual rent, rental valuation or lower/higher of the two.

With regard to releasing capital, the approach will differ across lenders and depend on the reason for the cash. Generally speaking, BTL lenders are more flexible with capital-raising than if it were a residential property.

manlovestreet

K_S said:

manlovestreet said:

Hello

I have a buy to let property, which I purchased cash (from savings) outright 4 years ago. I now wish to remortgage with a btl interest only mortgage to release funds on a 75% ltv. I have no outstanding debt and good credit. The property has tenants on 6% rental yield with the rent covering more than then 145% stress test. What proof do i need to show, if any,for the rental income? It is on a standing order to my bank account.

Are some lenders more inclined to lend to people who wish to release funds rather the transfer a mortgage from another lender?

Any other advice related to the above would be appreciated.

@manlovestreet Should be fairly straightforward based on the limited info in your post. The exact proof required for the rental income (if any) will depend on the specific lender and lenders will have different policies about which value they use for the stress test - actual rent, rental valuation or lower/higher of the two.

With regard to releasing capital, the approach will differ across lenders and depend on the reason for the cash. Generally speaking, BTL lenders are more flexible with capital-raising than if it were a residential property.

@K_S many thank for the information provided and your prompt response.

I will be comparing btl remortgages. Best deals seems to be 5 years fixed rate @ 2.45%, 75% ltv. Dont really want 2/3 year deals with high product fee and then looking for a new deal after 2/3 years.

No doubt interest rates seem to be going only 1 way, up. 

madaboutspots

Info: we’re close to our MF position. Fixed rate and 31/12/23 and we plan to have saved the balance. We’d like to have a buffer - so …

Q - are we able to get a fee free offset mortgage fixed for 2 years (for example only - I know our bank do this product) and put our entire savings in to completely offset the full mortgage!

This would give us the comfort factor of having ready access to savings whilst building up more to have a buffer - just in case.

Q - if we’re allowed to do this would we have no interest payments each month? So fee free and 0 interest? 

Thanks 😊 

K_S

@madaboutspots Generally speaking, and assuming you are eligible for the relevant products - yes and yes.

Boltlj91

Hi, I just want to sense check that we aren't being unrealistic as FTBs.

We've saved £15k for our deposit with no outstanding debts and clean credit reports. Now we are starting to look at properties, are we being unrealistic thinking that we will be able to get a 95% LTV?

When we plug our info into mortgage calculators we are given back all sorts of potential amounts we can borrow so we dont want to be looking at properties that are out of our reach.

Any guidance on this would be appreciated!

K_S

Boltlj91 said:

Hi, I just want to sense check that we aren't being unrealistic as FTBs.

We've saved £15k for our deposit with no outstanding debts and clean credit reports. Now we are starting to look at properties, are we being unrealistic thinking that we will be able to get a 95% LTV?

When we plug our info into mortgage calculators we are given back all sorts of potential amounts we can borrow so we dont want to be looking at properties that are out of our reach.

Any guidance on this would be appreciated!

@boltlj91 I'm not surprised to hear that you are getting varying results re affordability as at 95% LTV max LTI (loan to income) caps can vary from as little as 3.75x all the way to 5.5x depending on the specific mainstream lender and subject to meeting criteria.

As FTBs, if you have a clean credit history and no background debt, there's no reason why you wouldn't qualify for a 95% LTV product. Specifically which lenders/products will be available to you may vary depending how standard your income streams are.

To get maximum assurance, I would recommend getting in touch with a mortgage broker who can look at the entirety of your circumstances and income, and give you a realistic max borrowing figure and an AIP/DIP so that you can confidently view and offer.

Boltlj91

K_S said:

@boltlj91 I'm not surprised to hear that you are getting varying results re affordability as at 95% LTV max LTI (loan to income) caps can vary from as little as 3.75x all the way to 5.5x depending on the specific mainstream lender and subject to meeting criteria.

As FTBs, if you have a clean credit history and no background debt, there's no reason why you wouldn't qualify for a 95% LTV product. Specifically which lenders/products will be available to you may vary depending how standard your income streams are.

To get maximum assurance, I would recommend getting in touch with a mortgage broker who can look at the entirety of your circumstances and income, and give you a realistic max borrowing figure and an AIP/DIP so that you can confidently view and offer.

Thanks for the speedy response! I forgot to add in that we are both salaried (c.£60k combined) so I'm guessing thats pretty standard, we do get annual bonuses (£6k) but they weren't paid last year due to the pandemic so I'm guessing we can't factor those in.

bubby08

@k_s thanks for all your help to date. 

A quick question from your knowledge, what would be the remaining processes Nationwide have pending issuing of funds. Currently, they have given an DIP, done a soft search and provided a loan figure and interest rate and I have given the mortgage broker bank statements. 

At this point in your opinion, what is the likely hood of the offer falling through and the timescales involved.  

Thank you for all your help.

K_S

bubby08 said:

@k_s thanks for all your help to date. 

A quick question from your knowledge, what would be the remaining processes Nationwide have pending issuing of funds. Currently, they have given an DIP, done a soft search and provided a loan figure and interest rate and I have given the mortgage broker bank statements. 

At this point in your opinion, what is the likely hood of the offer falling through and the timescales involved.  

Thank you for all your help.

@bubby08 Has the full application gone in yet? Once the application goes in, Nationwide will then instruct a valuation, do the underwriting and then issue the mortgage offer which will be valid for 6 months from the date of issue. Currently, Nationwide is taking on average about 2-4 weeks from application to offer for straightforward cases. 
https://www.nationwide-intermediary.co.uk/placing-business/service-updates

You don't need to do anything specific to 'accept' the offer. 

After that, the conveyancing work starts and once it is satisfactorily completed, and contracts are exchanged, your solicitor will request Nationwide to release funds on a specific date (usually a day or two before completion). 

If the case has been placed with the right lender, application keyed in correctly and all requested evidence/queries can be satisfied, the likelihood of the application being declined is negligible.