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I don't own my own property, can i get a BTL mortgage??


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Hi guys,

 

I don't own my own property yet and never have, so is it possible to get a btl mortgage?

 

I have a cash deposit of about £40k and looking to purchase a property worth about £120-£130k with the intention to rent out. I live in central London myself and are quite happy to rent for the time been.

 

I have just started looking and spoke to a mortgage broker today who said i will really struggle to get a btw mortgage unless i won my own property and can show a history of making the mortgage repayments? 

 

Any advice or suggestions would be massively appreciated!

 

best,

 

Gavin

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Gavin,

 

Speak to a broker who specialises in Buy-2-Let mortgages, the environment changes so often it’s difficult for anyone to say.

 

I got a B2L mortgage with Natwest without owning my own home, although this still was worked on a multiple of my income.

 

So it depends on your salary ect, but yes, speak to a broker they typically don’t charge for advice and save you time and money.

 

Sam

Aged 20-30? Learn how to grow your wealth at Money Nest.

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Hi Gavin,

I managed to secure a couple of buy to let mortgages without owning the home I lived in, but this was at the start of last year so is times may have changed. The broker is key as many products won't be available to you so the options become slightly more limited.

 

br,

Marius

"buy land, they aren't making it anymore" - Mark Twain

 

My property goal: build a £5m investment property portfolio by 2025

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Hi Sam, Hi Marius,

 

Again, thanks for your reply's.

 

I spoke to Natwest last night for nearly 30 mins, and the outcome wasn't as I had hoped! they said " its not something they could provide me at this point" and they could take my application further. When I pushed them to explain why, they couldn't really give me a clear answer, especially considering I pass the criteria of having 25% ( and more actually) cash deposit and i'm earning over £25k in full time employment.

 

I'm just new to this website and forums, but I was wondering if its appropriate to ask what good brokers people have used in the passed? Ideally brokers who specialise with btl and in my case, ftb btl!?

 

Best,

 

Gavin

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Hey Gavin,

 

I believe the Natwest B2L product you were looking on scales on your income, I think it’s either 3.5 or 4 times (yes, this is unusual for a B2L).

 

So if the house you were looking to purchase was above 87,500-100,000 this may have been the issue. But I can’t say for sure.

 

I can recommend the brokers ClayWarden.

 

Sam

Aged 20-30? Learn how to grow your wealth at Money Nest.

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Lets see if we can get some clarity on your situation Gavin

You are classified as a 'first time borrower' i.e. you have never owned a property before or you currently don't own any property

BTL lenders as a whole (Nat West being the only exception) have decided en masse this is a class of borrowers they decline to consider for a BTL mortgage, for the following reasons

  1. in their logic, why would someone want to buy a property to rent out before they bought one to live in themselves. You may have a logical reason but it doesn't count; their money, their rules
  2. more seriously, since tougher guidelines on getting a main res mortgage were introduced over a year ago, more FTB's like yourself find that, even if they can get a mortgage, it is no longer large enough to make buying their first home a reality. This is because it is tightly linked to your provable income and lenders tougher stance on how much they lend to you on the FCA guidelines of responsible lending. BTL lending has a softer stance with only £25k income being the requirement. Lenders have clear evidence that people in your position have tried to exploit the relaxed income requirement of a BTL mortgage to, in effect, get their own place to live in by the back door i.e. applying for a BTL mortgage with the clear intent to occupy it themselves and thus get a mortgage proportionally bigger than they could ever get based on their salary. As living in a property that you have a BTL mortgage on is in direct contravention of the rules, the simplest broad brush solution to this problem is to just not lend to any first time borrower

Nat West will lend to you in principle but the £25k income is ignored, as is the rental income. They will assess your mortgageability precisely as they would if you were applying for a main res mortgage. This way they ensure that you borrow no greater sum than you could if you want a mortgage for a place to live in but they allow you to rent it out as it is a BTL mortgage.

You may well find that using a (good) mortgage broker who understands how Nat West implement this will mean you get to find out how much they will actually lend to you; and it may not be enough to buy the property you are considering if your income is insufficient in their opinion

PS: the way a main res mortgage affordability is underwritten is no longer simply a crude multiple of your income. Equal consideration is given to your spending habits to determine how much you can realistically afford to borrow. Also future interest rates rises are factored in to ensure that you can only borrow what you can afford to repay on higher rates than currently apply today.

Kevin Wright

Positive Property Finance

Telephone: 01206 586586

Email: inspireme@thinkpositively.co.uk

Brokerage website: www.positivepropertyfinance.co.uk

Workshop website: www.ninjainvestorprogramme.co.uk

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Ihi I am in a similar position, renting a home in central London and I got a mortgage this spring through mortgage brokers: the Buy to let business. There wasn't masses of choice but the interest rate was competiative . There was also something about the property that reduced my options further. Mortgage was with The Clydesdale .Also it wasn't a multiple of my income - I just had to have the minimum 25k to qualify Don't give up !!

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  • 2 weeks later...

Hi Gavin,

 

Though your choices are limited, a handful of BTL lenders will consider applications from first-time buyers. A big concern for lenders, as others have commented, is 'back-door residential': fraudulent applications for buy to let mortgages from individuals who wish to obtain a residence for themselves.

 

Because of this, you should expect to be quizzed on your application. You will probably also be subject to standard residential affordability assessments, as well as rental cover calculations. If you rent your current home, the underwriter may count the rent you pay as an existing credit commitment – this might be why you ran into trouble with NatWest, particularly as you rent in London.

 

Your options broaden a little if you can make a joint application with someone who is an experienced landlord, provided they fit all of the lender's other criteria.

 

As others have suggested, you might find it beneficial to speak to a mortgage advisor who knows the market well and can help to place you with an appropriate lender.

 

Best wishes

Commercial Trust Limited – buy-to-let, bridging and commercial mortgage specialists


www.commercialtrust.co.uk


 


Follow us on: Twitter, Google Plus, LinkedIn, Facebook


 


 


Please note that anything I write is for information purposes only, and should not be taken as advice.

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Hi Gavin

 

Without knowing your income and or personal circumstances, commitments it's difficult to give a definitive answer. However most BTL lenders will essentially accept an application as long as you can provide a residential history in order to do the necessary credit checks etc.

 

In theory both BM Solutions and TMW would consider a funding application; as long as you can provide sufficient evidence the purchase isn’t a back door interest only residential purchase and you have the necessary deposit and income/ rental income.

 

Best advice is to speak with a local mortgage advisor, as both above mentioned lenders only accept applications from FCA registered advisor/ firms.

 

Hope this helps and best of luck

 

Regards Greig

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