The banks wont lend....

[proactiveproperty_uk_gmail_com]

Hello,

 

With the economy ground to a halt, it looks like banks are currently a closed shop for BTL products. At a time when there are potentially bargains to be had in the property market - how is everyone intending (or currently) getting finance to make the purchases?

I am toying with the idea of a bridge until it calms down but seems risky, and I dont currently have enough to buy cash unless I max out credit cards, loans and borrow from friends and family and then pay them back when I remortgage. I could refinance my home, but im years away from my current product end date and it appears that values are down considerably.

Id be interested to hear peoples thoughts

 

 

[ArjunB]

Cash is King during a recession. Those who have cash always do well during such times.

As for how to borrow, I think your best bet is to borrow from friends & family as much as you (depending on what interest rate you're offering them) & take use bridging for properties that you are very confident on.

[onkar]

1 hour ago, Murray D said:

Hello,

 

With the economy ground to a halt, it looks like banks are currently a closed shop for BTL products. At a time when there are potentially bargains to be had in the property market - how is everyone intending (or currently) getting finance to make the purchases?

I am toying with the idea of a bridge until it calms down but seems risky, and I dont currently have enough to buy cash unless I max out credit cards, loans and borrow from friends and family and then pay them back when I remortgage. I could refinance my home, but im years away from my current product end date and it appears that values are down considerably.

Id be interested to hear peoples thoughts

 

 

"Banks are currently a closed shop for BTL products"

Sounds like I just read a scary newspaper headline!

I have several mortgage applications that were started last week across 2 lenders via my Ltd company. There are still lenders and products available. A good broker is crucial in these times!

[proactiveproperty_uk_gmail_com]

That’s good news Onkar, I’ve been told that you can get lending on 60% LTV so perhaps my email was a bit misleading  

have you found lending at higher LTV? I’m not a ltd company so perhaps that’s the difference 

[proactiveproperty_uk_gmail_com]

1 hour ago, arjunb said:

Cash is King during a recession. Those who have cash always do well during such times.

As for how to borrow, I think your best bet is to borrow from friends & family as much as you (depending on what interest rate you're offering them) & take use bridging for properties that you are very confident on.

Yes that’s kind of what I figured. That cash would be the first choice. Problem with the bridge is if I struggle to get a mortgage then I’ll be stuck on the bridge which could end up expensive...even more so if it stays empty as it seems people aren’t looking to move home just now. 
I’m aware I’m listing the worst case scenarios

[onkar]

10 hours ago, Murray D said:

That’s good news Onkar, I’ve been told that you can get lending on 60% LTV so perhaps my email was a bit misleading  

have you found lending at higher LTV? I’m not a ltd company so perhaps that’s the difference 

Hmm, there should be more lending options Personally rather than via Ltd company! Although I have not looked at the Personal lending options for a long time.

You're right that LTV's have been slashed, not seeing anything above 75% (only with a few) at the moment.

[Alja nosm]

13 hours ago, Murray D said:

Hello,

 

With the economy ground to a halt, it looks like banks are currently a closed shop for BTL products. At a time when there are potentially bargains to be had in the property market - how is everyone intending (or currently) getting finance to make the purchases?

I am toying with the idea of a bridge until it calms down but seems risky, and I dont currently have enough to buy cash unless I max out credit cards, loans and borrow from friends and family and then pay them back when I remortgage. I could refinance my home, but im years away from my current product end date and it appears that values are down considerably.

Id be interested to hear peoples thoughts

 

 

Personally I think that route is not a good idea, in fact almost crazy. You'd be at your limit at every angle. Bridging, loans, credit cards, borrowing from friends and family. 

The amount of fees and interest I expect would wipe out almost all your savings buying at a 5-10% downturn. 

I dont think you would even get a btl mortgage based on how stretched you would be.

If you had some decent cash and not borrowing from every angle you'd have a chance.

....Perhaps maybe go for a renovation that you can uplift the value. Contact a broker that can arrange a light refurbishment bridging loan with a pre established finished property vaule and a btl product  to move on to. 

 

[Stuart Phillips]

I would second the advice suggesting that this is a bad idea.

• Firstly, you cant view anything, so you would be buying sight unseen. This would be a great time to sneak a properrty with serious issues through.
• Secondly bridging lenders are in the same boat. Surveyors are not attending properties and you wont get a bridge on something with an electronic valuation, not at a reasonable rate anyway.
• Thirdly, borrowing on credit cards to put down a deposit is madness and wont pass lenders anyway. They expect you to put the deposit up yourself and wont accept borrowed deposits.

As for the suggestion its business as usual, thats misleading. Currently in an SPV you can get a 75% mortgage with Shawbrook and Paragon. Thats it currently. Shawbrooks rates are high and their process painful in the extreme and Paragon are restricting desktop valuations to standard stuff, so no flats, HMO's, refurbs, high value properties etc. Hardly business as usual and ultimately not a constructive comment. There are scant few options for personal BTL mortgages either and they all come with the same caveats as above.

Another thought that we should be mindful of is that as a business owner its expected that you have some resilience, and have funds set aside to cover things like maintenance, voids and other unforseen circumstances. If your employer turned around and said they didnt have enough cash on hand to pay this months payroll you would be rightfully angry. Owning BTL is no different. If you dont have at least 3-6 months rent set aside on an ongoing basis then i would consider that irresponsible.

[proactiveproperty_uk_gmail_com]

Hi, 

 

Thanks for your input guys, Ive been told the same thing by my broker regards valuations being restricted and products with higher LTV being removed from the market so it's comforting to see some people echoing the difficulties with lenders at the moment. Im told that in some instances the market has dipped by around 10% so perhaps when lending becomes available again there will be some BMV units that people are eager to sell after having such a period of inactivity.

 

 

[Stuart Phillips]

I dont know how anyone can measure a dip in house prices so early. With valuations on hold there are going to be very few real, brand new, transactions going through. The value of a property is whats someone is prepapred to pay for it, and if you stop people from being able to make those offers then you cant observe changes in value.

The assumption might be that there will be distressed sales available after the lockdown, but i dont think this is going to work like that. Banks are not going to repossess for 3+ months, and people are easily able to get a 3 month break on their mortgage payments. In addition they should be shored up by the various government innitiatives. I really dont think there willbe that many distressed sales available, and actually, the buyers over the 3-4 months that have had to wait are all going to be making offers when restrictions lift and so demand might well outstrip supply. If thats the case then house prices are not going to come down in the short term...

[Alja nosm]

Agree with stuart.

[onkar]

2 hours ago, Stuart Phillips said:

I would second the advice suggesting that this is a bad idea.

• Firstly, you cant view anything, so you would be buying sight unseen. This would be a great time to sneak a properrty with serious issues through.
• Secondly bridging lenders are in the same boat. Surveyors are not attending properties and you wont get a bridge on something with an electronic valuation, not at a reasonable rate anyway.
• Thirdly, borrowing on credit cards to put down a deposit is madness and wont pass lenders anyway. They expect you to put the deposit up yourself and wont accept borrowed deposits.

As for the suggestion its business as usual, thats misleading. Currently in an SPV you can get a 75% mortgage with Shawbrook and Paragon. Thats it currently. Shawbrooks rates are high and their process painful in the extreme and Paragon are restricting desktop valuations to standard stuff, so no flats, HMO's, refurbs, high value properties etc. Hardly business as usual and ultimately not a constructive comment. There are scant few options for personal BTL mortgages either and they all come with the same caveats as above.

Another thought that we should be mindful of is that as a business owner its expected that you have some resilience, and have funds set aside to cover things like maintenance, voids and other unforseen circumstances. If your employer turned around and said they didnt have enough cash on hand to pay this months payroll you would be rightfully angry. Owning BTL is no different. If you dont have at least 3-6 months rent set aside on an ongoing basis then i would consider that irresponsible.

Aldermore, The Nottingham - accepting 75% LTV applications, good rates... Unless they have taken products off the market within the last few working days...

[proactiveproperty_uk_gmail_com]

I’d be surprised if there wasn’t a delay in the housing market bouncing back, there will surely be people who have lost, or will lose their jobs, and those that have had to use their savings for a house, to survive. People’s confidence will be low, and making a massive purchase will perhaps be the last thing on their mind. 

In addition,  I imagine there are more than a few properties that will have already been sat on the market before lockdown, that have just had another three months on inactivity  added on. I would imagine they will be eager to sell. 

[Stuart Phillips]

Aldermore and Nottingham are indeed still business as usual. Still not rich pickings out of 75 BTL lenders. Aldermores rates start with a 3...

[onkar]

7 minutes ago, Stuart Phillips said:

Aldermore and Nottingham are indeed still business as usual. Still not rich pickings out of 75 BTL lenders. Aldermores rates start with a 3...

How many Ltd company lenders are there with less than 3% rates?

[Stuart Phillips]

Paragon, Nottingham and TMW all have rates under 3% for limited companies. Aldermores personal rates start with a 3 where you can currently get rates elsewhere that are half that.

Im glad your sorted. But given the thread we are in, where OP is asking if he should make take some really risky steps to secure property now, my point is that its really not a good time. Funding is limited and its not a good idea to borrow from bridging lenders, or 'borrow' from family when BTL mortgages are all pretty much on hold for an unknown length of time.

[elvax]

On 4/14/2020 at 7:59 PM, onkar said:

"Banks are currently a closed shop for BTL products"

Sounds like I just read a scary newspaper headline!

I have several mortgage applications that were started last week across 2 lenders via my Ltd company. There are still lenders and products available. A good broker is crucial in these times!

do you have good BTL broker to recommend please? Thanks!

[mainly-mortgages]

It's been a couple of weeks since the start of this thread and there have been a few more options opening up in terms of lenders & products returning to the market. 

I'm a Broker and would more than happy to have a chat with anyone looking for a solution.

[proactiveproperty_uk_gmail_com]

Hello,

It is my understanding there are limited options for 75% LTV on personal BTL mortgages. TMW being one of the lenders. BM Solutions are still at 60% LTV. What options might you have at 75% LTV?

 

[Stuart Phillips]

Currently your options at 75% BTL Purchase are:

• Aldermore
• Bank of Ireland
• Cambridge
• Hinkley and Rugby
• Newcastle
• Paragon
• Principality
• Shawbrook
• The Mortgage Lender
• The Mortgage Works

Thats out of 75 Buy to Let lenders. Its possible, assuming you can get a viewing, assuming you can get a solicitor to exchange, assuming you can do a desktop valuation; They wont take flats, anything over £400k - £500k, HMO's or anything else unusual.

Its a temporary issue, banks are much better prepared for economic shock since 2008 and these houses are not going anywhere. I dont really see the point in trying to buy and mortgage now when the options are so limited and criteria so restricted. Why pay higher interest for the next 2-5 years when you can wait a month or two and have all the options available again?

[Stuart Phillips]

An update from BM Solutions:

Quote

• BM Solutions have announced that from Wednesday 29th April, they are lending back up from 60% to 75% LTV on Buy to Lets. This also includes Let to Buy back up to 75% LTV

 

[Stuart Phillips]

Update from Coventry:

Quote

• Coventry for Intermediaries had reduced their LTV down to 65% but as from tomorrow, Wednesday 29th April, this will go back up to 75% LTV. 

Update from Shawbrook:

Quote

• Shawbrook Bank have announced that their maximum loan amount for a drive-by valuation is £300,000 (and up to 75% LTV as announced last week). Other limits to LTV’s do apply where AVM’s are being carried out but these are product specific 

 

[proactiveproperty_uk_gmail_com]

Thanks for the update Stuart. Very helpful. 

[Stuart Phillips]

Barclays and Interbay commercial lending again:

Quote

• Barclays have reinstated the following products:
  • Buy to Let Remortgages up to 75% LTV

  • Help to Buy including Help to Buy London and Help to Buy Scotland

  • Product Transfers and Further Advances on their Residential Reward range up to 80% LTV

• InterBay Commercial have resumed lending today. There are some restrictions in place around being unable to do physical valuations but we’ll list those out under the relevant headings below