Mortgage BTS Query

Tim-B_5

Hi there everyone, thanks for reading my first post

My parner and myself are attempting to buy a property below market value in order to re-sell as soon as possible, we've been having the most atrocious luck so far.

The property is Valued at £250,000 and we can get it for £195,000.

We went through a very reputable mortgage company who offered us a residential re-mortgage, which we would use in accordance with a 1 day bridging loan. This all sounded good and well (We are first time buyers, so don't have a current residential) but after all was made clear about the fact that we need to have the intention to live there, transfer bills etc.. there, we realised we were advised a very "law bending" route, and subsequently have decided to not go down that route.

The thing we are looking for is a Buy to Sell (So i assume buy to let, it would categorise under) mortgage, we are trying to find one that is fully self cert, as w are both self employed, we have found an investor who is willing to put upto 15% deposit upfront, but we're finding it very hard to find a full self cert mortgage that would be what we need.

If anyone has any information on mortgages we may be needing to look at, or any brokers that might be able to help us in this situation, could you please give me any advice you can!

As much as we have read up and feel we do know a lot about whats going on, obviously the first time you try, it gets infinitely more complex, so please, go easy on me!

Any questions needed to be asked in order to help us, please feel free to ask!

Many thanks

Tim

herbiesjp

Tim-B wrote: »

who offered us a residential re-mortgage, which we would use in accordance with a 1 day bridging loan.

This would not have worked, as being FTB you would not have been re-mortgaging for a start?

Why do you think being self employed means self cert?

If you are looking at a BTL scenario - the property value as well as the expected rental income will need to stack up.

No such thing as a but to sell mortgage really - just a mortgage with no early repayment charges.

Tim-B_5

Its not so much I think of self employed meaning self cert, but self cert is the route that we would rather go down for now.

The remortgage would have been a remortgage, as we would have been lent the funds via a one day bridge to buy the house, then re-mortgaged the house at 90% of its value (£225,000) to pay back the bridging and get some cash back, before we sold the property.

herbiesjp

How long have you been self employed?

What are your earnings?

How long have you been self employed?

So even if you can get a full status mortgage, you still want to go self cert because that is the route you want?

Can you explain why you think self cert is the route you want to pursue?

silvercar

The remortgage would have been a remortgage, as we would have been lent the funds via a one day bridge to buy the house, then re-mortgaged the house at 90% of its value (£225,000) to pay back the bridging and get some cash back, before we sold the property.

I understand what you are trying to do. As far as I know (which is only info I've picked up on this and other forums), Mortgage Express are the only lender that openly allow day 1 remortgages.

PasturesNew

I don't see what is wrong with a proper route of:
1] Get a mortgage to buy the house. Mortgage with no tie ins.
2] The minute you buy it, move in and start trying to sell it again
3] Sell it

Where I DO have a problem is:
a] If you can sell it for more, why can't the current owner sell it for the higher price you expect to?
b] What if you can't sell it for more or get stuck with it?
c] How do you expect to sell it (estate agent? privately?)
d] How much do you hope to resell it for? What does your spreadsheet of ins/outs show you the profit would be?

My brain says:
Buy at £195k: £2k stamp duty, £1k other costs so maybe £3k costs
Mortgage cost I/O only at 7% is £1100/month. Be "stuck" with it for 6 months = £7700
Selling costs (privately): £1k
Total minimal costs to flip it are £12k

Use an estate agent and you can add in another £3k (inc VAT).

So you'd have to sell it within 6 months not using an estate agent at £207k just to break even.

Have I not understood what you are trying to do?

My question is: what makes you think you can pull this off?

Tim-B_5

herbiesjp wrote: »

How long have you been self employed?

What are your earnings?

How long have you been self employed?

So even if you can get a full status mortgage, you still want to go self cert because that is the route you want?

Can you explain why you think self cert is the route you want to pursue?

I've been self employed for 3 years, but only earning a Taxable amount for the past 14 months.

OUr combined earnings are around the £28,000 figure, which obviously, as we know, is quite low.

We've generally been advised in the past that both being self employed/freelance that self-cert is the way that we would have to go, my partner did most of the research into that, but all we have been told in lamen's terms, is that self cert is the way that we do need to go.

I understand about the rental stack up, we haven't had a full rental valuation done, as obviously the first mortgage offer was residential, so wouldn't have had valuation tie ins, but witha few calls to local agents, the rental value of the area has been put at "£600-£1200" which is not in the least bit helpful with such a wide radius.

Silvercar, thanks for your advice, as of right now, we are not planning to try the re-mortgage route now, i was filling in on what happened in the past, we are looking to a no redemption mortgage with no residential tie ins, and ideally no minimum time you must own the property. As i said, we now have an investor who is willing to put in 15% deposit if we can attain an 85% mortgage, with the intention of doing light decorating work, and getting it back onto the market asap.

herbiesjp

Tim-B wrote: »

I've been self employed for 3 years, but only earning a Taxable amount for the past 14 months.

OUr combined earnings are around the £28,000 figure, which obviously, as we know, is quite low.

So here lies the problem

Ok so self cert is not an option for you as you have verifiable income

And that income is not enough to purchase on a residential basis.

If you were looking at a BTL scenario, to let out short term, you really need more accurate figures as that kind of difference is huge not only in expected rental income but in terms of the mortgage that will be agreed for you

Tim-B_5

PasturesNew wrote: »

I don't see what is wrong with a proper route of:
1] Get a mortgage to buy the house. Mortgage with no tie ins.
2] The minute you buy it, move in and start trying to sell it again
3] Sell it

Where I DO have a problem is:
a] If you can sell it for more, why can't the current owner sell it for the higher price you expect to?
b] What if you can't sell it for more or get stuck with it?
c] How do you expect to sell it (estate agent? privately?)
d] How much do you hope to resell it for? What does your spreadsheet of ins/outs show you the profit would be?

My brain says:
Buy at £195k: £2k stamp duty, £1k other costs so maybe £3k costs
Mortgage cost I/O only at 7% is £1100/month. Be "stuck" with it for 6 months = £7700
Selling costs (privately): £1k
Total minimal costs to flip it are £12k

Use an estate agent and you can add in another £3k (inc VAT).

So you'd have to sell it within 6 months not using an estate agent at £207k just to break even.

Have I not understood what you are trying to do?

My question is: what makes you think you can pull this off?

The main reason to not move in there, is that we both live quite a way away from where it is, and both work online, from home and need a firm base to work from, moving in and out of here, getting all setup and back out would cause a big problem and the outage, extra travel costs etc.. would provide a big loss at the end of the day.

Whilst I understand what you're saying about selling at £207k to break even, within 6 months, i totally understand that, and we're not taking for granted the fact that the house was valued at £250,000 in late November, obviously these things are subject to possible change, the current owners are trying to sell privately, and quickly due to being in thier 60's and the man has a heart condition, infact they have been so rpesumptuous as to already move out, with nothing signed at all, which is annoying to say the least, should we not go through with it.