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Mortgage declined on city centre BTL


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My sister and I are in the process of purchasing our 1st property through our Ltd co, a 2 bed flat in Liverpool city centre close to the Liverpool Waters area. The deposit was paid on this, off plan, last year and it is due to complete in 6 weeks. We used a mortgage broker who was highly recommended on this site who submitted a mortgage application which was declined. We have been advised that any further applications are also likey to be declined and he has recommended that we withdraw from the purchase of this property. The main reasons cited were that it is an investor area wich would limit the re-saleability of the property and that there are a high number of developments in the area with many more planned. The developer is also offering a 7% net rent return scheme which the broker advised is further reducing the lenders available to us.

Having done our research on what we thought was a good investment, we were shocked to hear this. Has this happened to any of you before? What are our options now? Is this scaremongering from an overly cautious (but experienced) mortgage broker or do we heed his advise?

Many thanks if you have read to the end. We would really appreciate your views and advice. 

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As much fun as it can be to correct a fellow broker firm. They are correct that builders with high concentration of rental properties, have difficulty in there clients obtaining finance. The theory being that once complete there will be a localised "over supply" of rental properties, resulting in lots of voids, low tenant quality and low rents. A builder should aim for a nice mix of tenure, which is why you often see many properties sold that prohibit renting in the title (for first few years).

The Rent Guarantee schemes confirm this and may not be worth the paper they are written on. The company guaranteeing it may simply disappear.

That all being said - give paul.lowcock@bespokefinance.info an email. He had the same problem on a case recently and resolved it.

:wub: Get Mortgage Advice from my Team at Bespoke Finance on 08009202001 or email hello@bespokefinance.info 
:ph34r: 
Please don't take my messages on Property Hub as Personal Financial Advice, just a rambling guy passing time on a Coffee Break.
 

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Adam Hosker, many thanks for your reply. I completely understand the views of the mortgage company but after much research and deciding to pursue the 'buy off plan in city centre locations' strategy, I have been completely thrown off kilter. I did not expect to face this issue and had not come across anyone else who experienced it. I'm now not sure that I want to continue with this strategy if it will lead to further issues in the future. I am considering pulling out and focusing my search on suburban areas with potential for growth. I suppose I just wanted confirmation that I'm not alone in the issues I have faced.

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That may not be unwise - in an over saturated block of rental flats. There is a lot of tenant turnover and competition to rent. As I mention in passing above though, Builders know this and often mandate a good split and those are the ones you want to look out for.

:wub: Get Mortgage Advice from my Team at Bespoke Finance on 08009202001 or email hello@bespokefinance.info 
:ph34r: 
Please don't take my messages on Property Hub as Personal Financial Advice, just a rambling guy passing time on a Coffee Break.
 

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