Mortgage broker - ask me anything

GAMBITv5

Chally2697 said:

Hi,
I am new to the forum but I’m hoping you can help. Not sure if this question has been previously asked.
Fourteen years ago i purchased a flat off plan as a buy to let investment in Durham. The flat was initially valued at £130,000 by the mortgage company. I put £10,000 deposit down and mortgaged the rest with Birmingham Midshires at the time. I have had the flat let out for the majority of this time and have been able to cover the mortgage payments. The mortgage i have with Birmingham Midshires is an Interest only mortgage and £120,000 is still owed. I have 11 years left on the mortgage. When me and my partner initially purchased the property it was as an investment. I have never seen the property reach anywhere near the original purchase price and for the most part the flats current value has been around £85,000 - £90,000. 

My feelings are that a major miscalculation was made by the mortgage company when it was initially valued for mortgage purposes. Would i have any grounds for complaint or claim in respect of the original valuation by Birmingham Midshires? If so who would be best to contact?

Thank you

The mortgage company didn’t tell you to pay 130k for it though right? 

The builder / developer / estate agent & yourself valued it at £130k. A valuer then agreed it was worth around the same amount and the bank lent you the money to buy it. 

I don’t think there is any negligence here from BM as they are not the ones who have valued the property in question. 

As with the conditions of IO mortgages I’m assuming you’ve got a suitable repayment vehicle in place to neutralise your position? With an expected downturn in property values looming (and the IO chickens soon coming home to roost) it might be prudent to sell / redeem your mortgage perhaps?

Feu

I have a slightly complicated situation that I hope I can get a little advice on?

I own a maisonette (leasehold) that I have a mortgage on, and just under 50% equity tied up in it. Earlier this year my partner (who has no stake in the property) and I moved to a larger place that we rent and I started renting the place out to cover the costs (barely!) I contacted my mortgage provider (nationwide) to inform them of the change and they said this was fine until my fixed term ended as it was under a year.

So I now need to look at remortgaging as a buy to let. However there will be an additional complication in the fact I'm moving abroad next summer.

Do I need to inform when I take the mortgage out of the plan to move outside the UK, would it affect the mortgage in anyway? We don't know exactly when we are going at this stage, so it could be longer than that. I also don't know what my income will be other than the rental when this happens, certainly nothing in the UK. I will be living off my partner for a short time until I sort out some work, so I understand this may not look good for an application.... 

So some honest advice as to how best to approach this, I don't want to mislead anyone, but I also want to get this sorted out before I have to start planning the move. 

Many thanks in advance!

K_S

Chally2697 said:

Hi,
I am new to the forum but I’m hoping you can help. Not sure if this question has been previously asked.
Fourteen years ago i purchased a flat off plan as a buy to let investment in Durham. The flat was initially valued at £130,000 by the mortgage company. I put £10,000 deposit down and mortgaged the rest with Birmingham Midshires at the time. I have had the flat let out for the majority of this time and have been able to cover the mortgage payments. The mortgage i have with Birmingham Midshires is an Interest only mortgage and £120,000 is still owed. I have 11 years left on the mortgage. When me and my partner initially purchased the property it was as an investment. I have never seen the property reach anywhere near the original purchase price and for the most part the flats current value has been around £85,000 - £90,000. 

My feelings are that a major miscalculation was made by the mortgage company when it was initially valued for mortgage purposes. Would i have any grounds for complaint or claim in respect of the original valuation by Birmingham Midshires? If so who would be best to contact?

Thank you

@chally2697 Sorry to hear about the predicament, unfortunately not unusual for people who bought flats around 2007-08.

I don't think you'll have much luck with a complaint as values can rise/fall so it's unlikely to be upheld. Plus BTL mortgages are unregulated so you don't get the same protections as you would for a residential mortgage.

If you did want to complain BM would be the first point of contact.

If you want to be able to retain the flat at the end of the current term, you would most likely need at least 25% equity (based on the current valuation) so you'll need to plan for that.

sanaubair

Hello,

i need a little help on this please. Natwest asked for further documents such a company accounts but one year is in loss and this year in small profit. Although ive a huge turnover. Is this going to cause a problem? But ive been paying myself salary on time. 

Although ive other source of income such as rental, working tax credits. 

Is that going to cause some issue. Please any help?

Little_Gem

Hello, lots of great advice on here I feel like I’m learning a lot! 

Just a quick (potentially stupid) question, our deposit is saved across two LISA’s and is earning interest every day which means it is a bit more than we initially stated when we applied for our mortgage. 

What happens to the extra when the solicitors request the deposit money? Or can they only request exactly what is required for the purchase plus the mortgage? 

FTB here with no clue on anything! I would just find it annoying to be left with a LISA I no longer pay in to that has a relatively small amount of money left in it! 

K_S

sanaubair said:

Hello,

i need a little help on this please. Natwest asked for further documents such a company accounts but one year is in loss and this year in small profit. Although ive a huge turnover. Is this going to cause a problem? But ive been paying myself salary on time. 

Although ive other source of income such as rental, working tax credits. 

Is that going to cause some issue. Please any help?

@sanaubir The underwriter can already tell from the abbreviated accounts on Companies House if the SA302 sal+div numbers aren't in line with profits.

Off of the top of my head, NatWest ltd co criteria is that the business should be profitable, divs should not exceed profits, and they don't consider income from retained earnings.

I wouldn't worry too much, I'm sure your broker has taken all this into account before recommending NatWest. 

sanaubair

So you think they wouldnt decline it on that basis?

K_S

sanaubair said:

So you think they wouldnt decline it on that basis?

@sanaubair Apologies I've no idea as I know nothing about your case besides the very limited info in your post. What I meant to say was that your broker wouldn't have placed it with NatWest without being confident that it fits with them.

sanaubair

I just mean to ask would they likely to decline if incase one year is a loss of 2000 and other year profit of 700 and salary from that ltd company being 4120 (having other source of income

K_S

sanaubair said:

I just mean to ask would they likely to decline if incase one year is a loss of 2000 and other year profit of 700 and salary from that ltd company being 4120 (having other source of income

@sanaubair I'm sure your broker would've looked at the numbers and wouldn't submit it if they thought NatWest would decline it. I can't really comment usefully as I know nothing about the case. Good luck, I hope you get an offer soon!