Mortgage Advice

Mission193

This is pre mini budget:

I had a offer accepted on a house in the region of £350k.

We have the 10% deposit in savings. 

Our current house I own with no mortgage. Planning on renting it out.

3.99% fixed with broker with HSBC. (5 years)

4 weeks after submission of mortgage application HSBC advised they want 20% deposit not 10% as I can’t prove I will rent the property out.

The broker was fully aware of me renting it out but didn’t put it on my application to the bank.

I am unable to get the extra £17k needed. I can’t get a BTL as it’s under the threshold. Plus I don’t want to do it.

all the fixed rates now are £300 higher. Only option is a discounted variable at the same 3.99% with the risk of higher payments.

My questions are:

1: would you still go through with the purchase
2: would you fix or discount variable 

I am typing on a old iPhone so apology for the layout. Any advice would be appreciated 

silvercar

Presumably the lender can’t be certain that you won’t rent the new property out if you are not selling your current property - they won’t care that you are renting your current property. They are concerned that you are getting a residential mortgage but won’t rent it out.

Could you raise the extra deposit by taking the minimum mortgage you can on your current home, but then repay a lump sum soon after completion to lower the borrowing? Choose a mortgage with no redemption penalties.

I assume you have investigated the sdlt situation as you will be increasing the number of properties you own.

Mission193

Hi Silver

I have the stamp duty for the second home already covered. It’s around £16k

The min threshold on a BTL is £25k.

I am annoyed with my broker as pre budget I had so many options and he recommended this product.

I am really unsure what to do.

Mission193

Apologise I didn’t read your first point correctly.

This would be a option but this will come with additional £3.5k of fees

This would also impact my affordability on the new house mortgage application.

K_S

@mission193 HSBC definitely do allow Let To Buy on the residential side, I've done one very recently for a client with BM on the BTL side and HSBC on the resi purchase side. Unlike most other lenders, they even allow (subject to criteria) the future rental income to be taken into consideration to boost affordability.

The usual evidence that HSBC requires for the background property being let is a BTL mortgage offer and the mistake your broker has made is perhaps to not have run this past their HSBC BDM in advance as this requirement (BTL mortgage offer for the property being let) is something that is clearly specified in their LTB criteria.

To answer your question, if the 3.99% 5yr fix is much cheaper than any other 5yr fix that you can get, what I would consider doing is getting a BTL mortgage on the property being let, for the minimum amount possible and then get HSBC to continue with the offer already issued. Of course, do get your broker to make sure that HSBC will honour the offer if you do so. It is a bit of a faff but if the HSBC mortgage is large enough, it might make the effort worthwhile.

Mission193 said:

This is pre mini budget:

I had a offer accepted on a house in the region of £350k.

We have the 10% deposit in savings. 

Our current house I own with no mortgage. Planning on renting it out.

3.99% fixed with broker with HSBC. (5 years)

4 weeks after submission of mortgage application HSBC advised they want 20% deposit not 10% as I can’t prove I will rent the property out.

The broker was fully aware of me renting it out but didn’t put it on my application to the bank.

I am unable to get the extra £17k needed. I can’t get a BTL as it’s under the threshold. Plus I don’t want to do it.

all the fixed rates now are £300 higher. Only option is a discounted variable at the same 3.99% with the risk of higher payments.

My questions are:

1: would you still go through with the purchase
2: would you fix or discount variable 

I am typing on a old iPhone so apology for the layout. Any advice would be appreciated 

IAMIAM

Ive noticed this with HSBC, I believe one of the much better lenders out there. They have enhanced their policy for a lot of scenarios which meant customers would move to Natwest. Both Natwest and HSBC are now practically identical policy wise. However, HSBC has much better ERC rates and product end dates rather than fixed end dates on trackers.

Mission193

K_S

In regards to the below I am only going by my info from my broker. It will affect my affordability.

@mission193 HSBC definitely do allow Let To Buy on the residential side, I've done one very recently for a client with BM on the BTL side and HSBC on the resi purchase side. Unlike most other lenders, they even allow (subject to criteria) the future rental income to be taken into consideration to boost affordability.


The only option Is to apply again to another lender.

Would you wait for 6 months and start the search again or bite the bullet on a tracker or dis variable.

K_S

Mission193 said:

K_S

In regards to the below I am only going by my info from my broker. It will affect my affordability.

@mission193 HSBC definitely do allow Let To Buy on the residential side, I've done one very recently for a client with BM on the BTL side and HSBC on the resi purchase side. Unlike most other lenders, they even allow (subject to criteria) the future rental income to be taken into consideration to boost affordability.


The only option Is to apply again to another lender.

Would you wait for 6 months and start the search again or bite the bullet on a tracker or dis variable.

@mission193 It's a hard question to answer and at least for me, it would depend less on the mortgage aspect of the purchase (after all you're talking about 4% with HSBC vs 5.5% with another lender) and more on the property side of the equation - on how good the property is, how good a price you've got on it, how important is it that you move now, etc.

Mission193

KC

This is true. 

Property is 5 years old. Really good condition. 

Now pricing point. I feel it is at the limit for the area. 

We do need to move as our current house is to small.

TBH I am annoyed with my broker as he was fully aware of my circumstances and pre mini budget there was plenty on offer. (Yes I am a bit sour). If he had done it correctly this would not cost me £100s more each month.

thank you for the advice.

I have been offered Newcastle are they any good?