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Just had a phone call from a LL friend who is struggling to finance the purchase of a 6 bed semi detached town house he has had his offer accepted on. He wants to buy at 75%LTV of actual purchase price and shouldn't have any trouble obtaining the correct valuation. It's currently run as 4 bedrooms and a kitchen upstairs and a self contained flat (with a second ground floor kitchen) lived in by the owner downstairs.
TMW were happy to loan to him until the upstairs kitchen came to light.
Can anyone suggest an alternative lender I can suggest he try? I'm off shore and haven't bought anything myself in the UK for over 3 years now so I'm out of date with contacts.
Does he intend to live in the GFF himself or try and let them seperately?
Nick that's definitely a red herring and would require a very lengthy reply.
Suffice to say not all councils insist on same criterion, if they did it would change the nature of many HMO's which are in essence houses with shared communal facilities. These are not several bedsits with one mortgage (often a challenge themselves). They are not flats either.
It is one residential dwelling house which happens to have two kitchens and be in multiple occupancy, the utilities are provided centrally and included in the individual room rents (bedroom doors often don't have individual locks).
I can see a problem straghtaway if it really was necessary to have a kitchen in every bedroom- you would be unable to get lending on anywhere that hadn't if finance was dependent upon having the licence prior or at least a registration with the council if the lender required evidence of this. You'd have to pay cash or bridge , do the work to bring it to standard and then hope you could re-mortgage after getting full approval from the council at a later date- it would be too great a risk for most buyers.
Rosemarie - You need to perhaps speak to the local council licencing dept to see whether the property as it is proposed to be configured will require licencing. If so the licence is vested with the landlord, not the property so it is not directly transferable (if one is already in place) and a new application will need to be made.
Knowing what its status will then be will determine which lenders could be used as most B2L lenders avoid HMO's and properties on single title which may affect this one too.
We arrange funding for the majority of HMO's on a commercial basis as being the best solution, as the lending constraints are lower.
TMW seems to makje a habit of finding excuses not to lend, from what I've heard. As Dave says, HMO lending is often the commercial route.
Or you could take out one kitchen and put it back when doing the refurb. (I'm sure Lisa will know whether that is legal, but I know an investor who has done it a couple of times)
This is not one for TMW for a variety of reasons but Paragon would do it no problem.
You need to factor in a good 3 months to offer. They want a LOT of paperwork and provable income and rates aren’t great as only LIBOR trackers currently but closest funding to buy to let at 75% LTV without resorting to commercial like David says.
Lisa All comments are for education and information purposes only and do not construe as advice or a financial promotion. No liability is accepted for comments made. If you wish to receive information in an advisory capacity then please contact me about becoming a client. www.keys-mortgages.com
Thanks for answers Dave and Annie.
Annie I suggested removed kitchen and replace when purchased/financed but LL doesn't want to go that route because they want the kitchen which is fully fitted and operational and not going to be part of refurb. It's not really a case of pulling the wool over the surveyors eyes- he wouldn't need to be very sharp to realise what they'd done.
Also they hope to retain all the existing tenants and its currently fully let on that floor to 4 individuals who couldn't do without their kitchen.
I don't really see how they could remove kitchen prior to their purchase while it's not in their ownership nor bridge without being certain of funding later,the kitchen removal and inconvenience is too severe/costly step and risk to take.
I suggested check out the licencing with the council but they don't want to make waves for vendor who has been in the property 21 years and probably hasn't even declared a first floor kitchen to anyone! For the same reason my suggestion about going to her lender was a non-starter but its since transpired the property is not currently mortgaged anyway.
Not sure if he has used commercial funding before, he has a few properties already but I think all resi BTL's. I'll suggest commercial lending to him and pass on your details Dave if that's OK.
Lisa I was typing at the same time you were- I just read your reply too and will forward all points to the LL which will hopefully move things forward for him- he is Duncan and I'll tell him to mention me if he calls you!
Once again many thanks for replies. Rosemarie https://www.roomsintown.co.uk
Lisa- I forwarded him your comment, apparently after TMW he re-started his mortgage application process with Paragon
he replied in an email .......
It’s Paragon that we are having problems with. They keep moving the goal posts and I am not confident about them actually agreeing to lend when it goes to the underwriter. There does not appear to be anyone we can talk to with any authority. We have been in this position too many times before, when a monkey on the front desk says yes and the underwriter says no. Only after we have spent a lot of money.
Its highly likely Paragon will come through if he/the property fits criteria it is just as I have warned on here before they are very slow and do require every last piece of information. I would expect 2-3 months from application to offer.