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Using all of your money, wisely ....
Residential mortgages - for homeowners who also happen to be BTL landlords.
I will assume that many of you have residential mortgages.
At first sight, wanting a residential mortgage with one, or many more mortgages in the background could present problems to a lender because everything is based on affordability now, isn’t it?
Some lenders ignore BTL in the background, so long as they “wipe their own face”, so to speak, but they don’t generally allow BTL income to be used to support a residential mortgage. Other lenders will allow an applicant to use the net income, as shown on the SA302/Tax Calculation form.
However, there is a small band of High Street lenders who accept the gross rental income to be used as income, so long as the monthly mortgages are taken into account as a commitment.
This can make a huge difference. I have a client who was seeking to borrow £312,000 on their joint employed incomes of £66,000. Normally, this would be close to the maximum that they could borrow, using just their employed income. However, I identified a lender who would lend up to £426,864 when their BTL income was taken into account.
Now, as a responsible brokerage, we may not necessarily recommend that they should extend themselves that far; it’s not necessarily a good thing being so reliant on BTL income, but it is an indication that rental income can assist, perhaps when you need just a little income stretch to buy that property that you really want.
If you find yourself in this position, and would like to investigate this situation further, we at Property Tribes Financial Services know the lenders and their criteria who will say yes.
Call us on 01206 654444 or email your requirements to firstname.lastname@example.org
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I had a nightmare getting a res mortgage thee years ago
My wife and I purchased a Home on interest only in 2007 we decided we loved out home and decided to stay
what a job we had getting a mortgage my BTL income was totally disregarded even though I had been in business over 30 years
My wife has a good salary and I have a pension so we had to fall back on them for a mortgage but I also had to pay a lump sum off before they would give us an offer
and the mortgage had to be finished by the age of 75 so our term at the time was around 17 years
I never though in a month of Sundays this would cause a problem but it did
The lender was the Halifax
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
.... you didn't apply via us then? :-)
I know the market has changed now but it may not have been so easy three years if I had contacted you
but I’m over the hump now and my LTV will be less then 55% when the fixed rate ends in 3 years so I might give you a call and see what you can save me
We look forward to helping you :-)
By the way, LTV, equity etc is not necessarily the deciding factor, my article above is more specifically about raising enough money (irrespective of LTV) based on declared earned income. We know the lenders who are sympathetic to BTL'ers when resi mortgages are required.
Can you clarify how long the rental income needs to have been received to be considered? For example if you started renting a property out for a few months but do not yet have a tax return as the next return period has not arrived, would the lender still accept this rental income?
The banks would want to be reassured that the rental income that you need, in order to top up your personal income for residential mortgage purposes, is a true figure. Typically the banks would want to see a tax return, however, if you have not yet traded a full year, they might instead agree to use bank statements showing the rent and a copy of the AST confirming the tenancy and rental amount too. It would be prudent to be able to show 3-6 months as a minimum, however that shouldn't be a problem as residential mortgages don't happen overnight so you probably will have sufficient application / underwriting time to get the rent received and be able to show evidence of this.
As always, every mortgage is underwritten on a case by case basis, so for personalised advice contact the PT FS broker team on 01206 654 444 anytime.