Refinancing feasibility

[Alja nosm]

Ive set up an spv. So want to buy a property through that in cash maybe part bridging loan then refinance with a btl mortgage.

Whats the market like at the moment for:

-Valuations( conservative compared to 6month ago?)

-LTV % ( hoping for a 75%LTV)

- Affordability (125% of rent) 

- Will my earnings be taken into account if its a ltd co mortgage? 

- Will be a first time Landlord (I am a homeowner) 

- Securing a below 4% interest rate do-able.

-How long does the process take from application to funds into account?

 

Many thanks.

[Stuart Phillips]

Do it properly. Speak to some BTL mortgage brokers (were not busy...)

You can't navigate this on some basic internet advice, there's a very real chance you could tie all your cash up for a few years if you are not careful. The chance of you being able to remortgage a BTL all the way to 75% anywhere south of Sheffield is slim unless you are very clever about what you buy. Worth rates increasing, what you can borrow for a given rent has dropped significantly.

That said, there will be bargains this year for cash buyers, but the refinancing won't be straightforward.

[barry hughes]

Hi Alja,

I have all my properties in my own name and wifes name so not to offay with ltd company mortages but at a recent property networking event an investor and mortgage advisor were saying that the best LTD Company mortgage rate they could get was 8% and after running the numbers on a standard buy to let they were left with 40 pound profit

Barry

[Stuart Phillips]

Actual rates are not 8%, but the way the rent is assessed for affordability uses 8% in some cases, more like 6% - 7% realistically though.

It's a very real possibility that property owned in personal names can result in a loss and still generate a tax bill however.

[Alja nosm]

5 hours ago, Stuart Phillips said:

Do it properly. Speak to some BTL mortgage brokers (were not busy...)

You can't navigate this on some basic internet advice, there's a very real chance you could tie all your cash up for a few years if you are not careful. The chance of you being able to remortgage a BTL all the way to 75% anywhere south of Sheffield is slim unless you are very clever about what you buy. Worth rates increasing, what you can borrow for a given rent has dropped significantly.

That said, there will be bargains this year for cash buyers, but the refinancing won't be straightforward.

It is West Midlands. I know the area well. I normally flip properties but sold the last one just at all time high and have ducked out market since due to obvious reasons. Not flipping for now. However there is a real opportunity for a 100%brr with this one so would like to gain a btl before investing the money somewhere else. I can use 100% cash to keep it simple.

3 hours ago, Stuart Phillips said:

Actual rates are not 8%, but the way the rent is assessed for affordability uses 8% in some cases, more like 6% - 7% realistically though.

It's a very real possibility that property owned in personal names can result in a loss and still generate a tax bill however.

The property rent will cover 7-7.5% but hoping I would get a 75% mortgage at around 4%. For a 3-5year fix. 

Worst case scenario is I just have to hold a property for a few years and collect £700-750pm. Again Ideal I'd like to mortage and use the cash for something else. 

[kirsty_c]

The current UK base rate is 3.5%. What you are seeking is in effect a loan priced at 0.5% over base which is just not realistic. (Standard BTL rates were in the 2-4% range when base rate was rock bottom)

BTL rates are starting to move downwards a little (more slowly than we would like to see) Upper 5's and into 6's is where you should be doing your current calculations but as Stuart has pointed out already some lenders are stress testing at circa 7 - 8%. On 5 year fixed products some are stressing at pay rate so there are options. 

I'd engage a broker fully with your scenario so they can hunt the market for you and advise you of the options available. There are so many variables which could rule any given lender out depending on your circumstances so its pretty impossible to be more specific based upon so little information.