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Scott mccallum · 20-09-2012, 05:00 AM

Morning All,
Can I purchase a property with cash then remortgage with a BTL mortgage next day in Scotland.
Thanks
Scott

Vanessa Warwick · 20-09-2012, 07:43 AM

Hi Scott,

Welcome to Property Tribes.

First of all, I think it's important to understand that the scenario you mention would not involve a re-mortgage. It would involve buying in cash then taking out a BTL mortgage.

To avoid money laundering and manipulated deals, it is very unlikely that any lender would allow such a transaction.

Most lenders require that you have owned the property for a minimum of 6 months. They want to see it on the Land Registry and how much you paid for it.

They will most like value the property at the amount you paid for it, regardless of it's percieved true market value ... unless of course you have made major improvements to the property in terms of refurbishment and can show receipts etc.

I know Scotland does have slightly different legislation, so I will ask a mortgage broker to give you a definitive answer. (I am not a mortgage broker).

John Corey · 27-09-2012, 11:54 AM

Vanessa,

Does the CML apply in Scotland?

Scott,

While I agree that in true 'English' a property that does not have a loan on it would not really be a 're-mortgage' when you obtain finance secured by it, the term is used pretty consistently in the industry to include exactly what you are asking. In other words, I understood what you meant by the term and most others would also.

As Vanessa highlights, a lender would have some degree of concern when it comes to the value being used for the loan underwriting. Some lenders, commercial mostly, might be happen to use the market value and not the purchase price even if there was limited time between the two. Market practice in this case would be to use a low or lower LTV so they have an added cushion just in case.

The logic is the odds of fraud are higher when lending against the market value soon after a physical sale has taken place and the two numbers are not the same.

Kevin Wright · 28-09-2012, 12:10 AM

Hi Scott

Leaving Scotland out of it for the moment

You are quoting the Mortgage Express model which died out when they did and no other lender since has been daft enough (from a lenders viewpoint) to allow it. It hardly turned out well for MEX did it?

Vanessa correctly says that most lenders, BTL ones certainly, impose a 6 month time frame of ownership before a remortgage application can even be submitted

To clarify Vanessa's definition.... you apply for a mortgage when you purchase a property. When you want to refinance a property you already own this is termed a remortgage. Agreed it is only factually correct if you have a mortgage on it and are replacing it. However the term remortgage is commonly used even if there is no mortgage on it. perhaps it should be called refinance in that situation but generally it is defined as purchase = mortgage; refinance after purchase = remortgage

Northern Rock will remortgage within 6 months of ownership but only at the purchase price, so hard to see what you would gain from the process.

Commercial lenders will remortgage within 6 months too.

Given that you cant apply for a remortgage before you own the property Scott, how would you propose to get all the component parts of a mortgage (survey, underwriting, offer issued) all in one day? Most lenders struggle to complete all of that within one month

Vanessa Warwick · 28-09-2012, 07:31 AM

Kevin,

Can you advise whether mortgage & CML guidelines are different in Scotland or do they follow U.K. laws and guidelines?

John Corey · 01-10-2012, 08:35 AM

UK laws?

England and Wales have a legal system. Scotland has a legal system. Two legal systems within the UK.

Guidelines are guidelines. They are a set by a trade association or a business. The 6 month CML guideline is a discretionary item that any lender can choose to ignore for a specific situation. A lender might have the right but that does not mean they will automatically chose to do so. Like an option, the lender has the right but not the obligation to enforce a 6 month minimum ownership before refinancing.

Kevin Wright · 01-10-2012, 09:07 AM

....what John said

eloquently and concisely

Scott mccallum · 14-10-2012, 01:27 AM

Thanks for all your reply's.
Have passed on this one it was a £60,000 property with an asking price of £30,000, it required a bit of work.

Local estate agent informed me property Market in Scotland is picking up, have missed out on 2 properties this week both going to closing dates.

Are prices going up?

Scott

Richard Reid · 25-11-2012, 12:07 PM

Hi Scott,

Where are you in Scotland,
Im from Aberdeen but live overseas, i know the Aberdeen market has been pretty steady and although many houses were advertised at Fixed price, seems more are going back to Offers over and closing dates, meaning the market is picking up a bit. I know for Aberdeen there is not to many bargains to be had, or property BMV.

I get e-mails from Grant Property Management they seem to find a lot of BMV property in Dundee Edinburgh and Stirling. and claim the rental markets are pretty good.

Richard

(14-10-2012 01:27 AM)scott_mccallum Wrote: Thanks for all your reply's.
Have passed on this one it was a £60,000 property with an asking price of £30,000, it required a bit of work.

Local estate agent informed me property Market in Scotland is picking up, have missed out on 2 properties this week both going to closing dates.

Are prices going up?

Scott

Scott mccallum · 25-11-2012, 07:17 PM

(25-11-2012 12:07 PM)RJR333 Wrote: Hi Scott,

Where are you in Scotland,
Im from Aberdeen but live overseas, i know the Aberdeen market has been pretty steady and although many houses were advertised at Fixed price, seems more are going back to Offers over and closing dates, meaning the market is picking up a bit. I know for Aberdeen there is not to many bargains to be had, or property BMV.

I get e-mails from Grant Property Management they seem to find a lot of BMV property in Dundee Edinburgh and Stirling. and claim the rental markets are pretty good.

Richard

Hello Richard,
I'm in Glasgow. Investing in the south side of the city, the Market is good and tenant demand is high, still a lot of uncertaincy among sellers my last purchase I was first to view and make an offer the seller wanted to wait but the estate agent told them to accept, my offer was 14% BMV, property was recently refurbished.
Are you still investing in Scotland?

Best wishes
Scott

(14-10-2012 01:27 AM)scott_mccallum Wrote: Thanks for all your reply's.
Have passed on this one it was a £60,000 property with an asking price of £30,000, it required a bit of work.

Local estate agent informed me property Market in Scotland is picking up, have missed out on 2 properties this week both going to closing dates.

Are prices going up?

Scott

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