Mortgage decline should I appeal?

Laura_ingles

Hi everyone,

Wondering if anyone can give me advice. I have a mortgage broker…

I’m a leaseholder of a good sized 1 bed flat in central london. It’s in a 3 storey block on the edge of the estate. It’s on a tiny estate of only 3 blocks. Used to be council years ago but now run and managed by HA. Close to canal and all major transport links.

Properties rarely come to market here and is viewed as a prime and in demand location for both sales and esp. lettings  by local EA’s - they have high demand for lettings here and tend to sale within a week. 40% of the block has been bought and leaseholders tend to keep and let properties out. 

My btl Mortgage application (was good rate)  has been declined after valuation. The valuer reported  back that the property is on public sector housing estate and under circumstances, not suitable for mortgage because of limited historical evidence of transactions/demand in block (like I have mentioned properties in this estate rarely come to market). 

I’m really shocked by the reason given  for the decline. I have spoken to leading EAs in the area and they find it equally surprising - properties here are viewed as good investments and it’s a prime location for them.  One has just completed a sale on my estate! My concern is the individual working on my application probably don’t have local knowledge….

Do you think it is worth raising a post evaluation query with the underwriters? If so what would be the best way to approach And would it be worth  the time and energy? 

Laura_ingles

Hi, wondering if anyone can offer thoughts to the above.

 is there a thread that this question would be better placed. Any advice would be appreciate:) 

K_S

@laura_ingles Sorry it isn't clear to me whether you're the buyer, vendor, trying to remortgage from residential to BTL or trying to take out a BTL mortgage against a currently mortgage-free property?

In any case, if the valuer has given a zero valuation to a central London low-rise flat, it's probably more to do with the specific lender's risk appetite towards ex council properties or properties situated on social housing estates rather than anything fundamentally wrong with the property.

I don't have any opinion on whether it's worth appealing or not but I'm pretty sure your broker should be able to find an alternate lender willing to consider.

Laura_ingles

@K_S

Thank you for your reply:)

Apologies I was not clear. I have a residential mortgage at the moment looking to remortgage as BTL. 

Advisor is looking elsewhere but the interest rate on this application was good. And rates have now increased (doubled) with the mortgage providers that I could approach now.  

I actually phoned the banks helpline who declined mortgage. Their advisor said she had never heard of this being an issue before and ex local or HA are usually acceptable. 

DE_612183

can you not just get your existing mortgage lender to allow you to rent - usually they just need a letter, sometime they charge you a fee to do it.

Laura_ingles

@DE_612183 my offer on a property has been accepted on a house (the mortgage on this has gone through) …. the plan was to release equity (holding 25% equity on this flat) to raise deposit. To my understanding, I passed all
checks but decline because of valuers comment. 

JMA74

if properties are rarely bought and sold then the valuer has little to evidence that the property would be easy to sell in event of a reposession.  Lender doesnt want to be stuck with a property that is unsellable.   
Without the land registry data confirming that sales actually complete on the block then a valuer will sometimes £0 value the property as they cant satisfy that point in showing it is readily sellable.   Valuers will rarely change their mind.   

If you have other options it would be worth exploring those while appealing this decision.   

A lot has changed in the last few days in respect to the stress tests for Buy to Lets.  So rates increasing might be an issue but borrowing amounts are also coming under pressure as well.  Case i submitted 2 weeks ago could borrow £220k, but with the same rent they can now only get £145k.   

So dont leave it too long to explore plan B

Laura_ingles

@JMA74 Thank you for the reply. I think you are right to continue with plan b options. 

Do you know if there is a website where I can see historical lettings for this block/estate/road which I could use as comparable evidence of demand… if I go for an appeal? 

JMA74

If its sales data they are concerned about then its going off land registry information.  Rightmove sold prices also show this information 

Laura_ingles

@JMA74 thank you:) should I be looking at ‘let’ properties rather than sold? 

JMA74

My assumption from experience (I'm a broker) is that they are worried about lack of evidence of sales. In which case you are looking for evidence of completed sales that they cant see already.  
Perhaps estate agents will have sales running or recently completed that they can help you evidence. 
Sales data doesn't usually reach Rightmove for 6 months so any recent data won't be showing. 

The majority of information you can find, will also be found by rhe surveyor already and used to form this opinion. Which is why its always hard to overturn these decisions