Is it just me or have lenders become REALLY awkward all of a sudden? Not only with an individual buy to let but with company lending as well.
When I bought my first buy- to- let flat 18 years ago it was one of the easiest things to do. However, lenders have become increasingly stricter, pedantic, and damn right annoying over the last couple of years. Please note that I am not referring to those net branch lenders that strive to make the lending process easier, but those working directly in collaboration with big banking firms.
Don’t get me wrong, the lenders are great for what we need them for and a lot of us wouldn’t be able to play the property game without them. If you’re new to investing or buying in general, don’t let this put you off. The intention of this blog is to make people aware of the potential difficulties you could face when buying.
If you’re wondering what I’m talking about, here’s a few examples …
Moving goal posts and changing criteria
A landlord of ours recently applied to re-mortgage a couple of flats that she bought in 2006 through her company. When she originally bought them, they were in a block that was majority council owned (75/25) but this was never an issue…until now. The first lender she went to refused her a mortgage on the basis that it was majority council owned so, her mortgage advisor chose a lender that stated they wouldn’t let this affect the application. Three weeks later, they’re rejecting the application because of that exact same reason (cue angry swearing emoji). So, our landlord has wasted nearly 700 on valuation fees and has achieved absolutely nothing.
There have been other clients of ours who have gone through the majority of the buying process based on passing the initial lending criteria (good credit, income etc), only to lose out on the property because the lender decided to be difficult.
Changing the way they look at affordability-
Back in the day a lender would look at the income you were getting from a buy to let property, tick their box and chuck a load of money at you (that’s how I remember it playing out when I was 20). However, now, they look into your finances, specifically your debts, with a fine tooth comb. They’ll consider other buy to let mortgages you have, your own mortgage, credit cards, cars on finance, store cards, how much you spend on Amazon (thank goodness I don’t need to make an application at the minute!) etc. They remind me a little bit of the night walkers in Game of Thrones; creepy, unnerving, make you feel like your life is in their hands. Ok, so I’m a little dramatic but I know you know what I mean!
What can you do to help your mortgage application?
This blog isn’t meant to put you off buying but it’s intended to give you a realistic idea of what you’re likely to come up against. The best thing you can do is to get yourself a good mortgage broker who will be at your side and can help you find a lender who suits your interests. You can search for mortgage broker companies that tend to have a list of some of the best lenders with reasonable interest rates.
I was talking with Alphie Cain from Diamond mortgages recently and he suggested that buyers should go to www.checkmyfile.com and complete a credit check search on themselves. This website combines 4 credit reference agencies together so it’s the most accurate representation of your credit file. Get your bank statements, ID, wage slips/tax returns ready in a file and then you can get in touch with a mortgage advisor and who should take it all from there.
Property investment is still a great business to be in. Don’t’ let this put you off. Once you overcome the lenders (and solicitors *sigh*) you’ll be well on your way to enjoying your investment property and the fantastic returns!
If you want to contact Alphie Cain (as mentioned above) just click here