Adverse credit mortgages
Adverse credit mortgages
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Discussion

B17NNS

Original Poster:

18,506 posts

263 months

Sunday 3rd July 2011
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Are there any lenders who would be willing to mortgage a property on a buy to let basis to someone with adverse credit. No bankrutcy, IVA's or CCJ's. Just a few late payments on credit cards, loans, late utility payments, that kind of thing.

Property valued at £170k, finance required circa £150k. Tenant waiting £700 PCM.

Additional property already owned and paid for value circa £120k, tenanted at £500 PCM.

Any advice greatly received.


Chipper

1,531 posts

233 months

Sunday 3rd July 2011
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Not trying to go off topic but as someone who has always s been tempted to go in to buy to let's, where do you earn an income from doing the above? £150000 mortgage is going to be over £800 a month and in my eyes house prices are going to only go one way for a while so why is it worth even contemplating doing the above?

I'm just interested in how people make this work as to me it looks crazy?





B17NNS

Original Poster:

18,506 posts

263 months

Sunday 3rd July 2011
quotequote all
I appreciate your point but there's a little more to the story than I've made clear in my original post.

I bought the house (financed by my ex mother in law) for £120k. I renovated it and after the split moved into it. She now due to retirement needs to get her cash out and is wiling to let me have hve it for £20k BMV.

This is a short term thing for me to allow me to get my finances back in order. I'm not after short term gain, I just would like if possible to hold onto a property that I sunk a lot of blood, sweat, tears and money into.

My only goal is to hang onto the property for a few years and have it pay its own way so to speak with a view to then moving back in.

otherman

2,246 posts

181 months

Sunday 3rd July 2011
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Chipper said:
Not trying to go off topic but as someone who has always s been tempted to go in to buy to let's, where do you earn an income from doing the above? £150000 mortgage is going to be over £800 a month and in my eyes house prices are going to only go one way for a while so why is it worth even contemplating doing the above?

I'm just interested in how people make this work as to me it looks crazy?
Because at the end of the loan you own a house you haven't paid for.

flyingjase

3,094 posts

247 months

Sunday 3rd July 2011
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B17NNS said:
Are there any lenders who would be willing to mortgage a property on a buy to let basis to someone with adverse credit. No bankrutcy, IVA's or CCJ's. Just a few late payments on credit cards, loans, late utility payments, that kind of thing.

Property valued at £170k, finance required circa £150k. Tenant waiting £700 PCM.

Additional property already owned and paid for value circa £120k, tenanted at £500 PCM.

Any advice greatly received.
To remortgage BTL with adverse credit for 88% LTV ain't gonna happen (£150k on a £170k value).

However if you have no mortgage on your £120k property, then I'm sure you could get at least 60% LTV on that realising £60k. You will of course get royally bent over on the rate though.

B17NNS

Original Poster:

18,506 posts

263 months

Sunday 3rd July 2011
quotequote all
flyingjase said:
You will of course get royally bent over on the rate though.
That was my assumption. Have a meeting with a broker in the week.

Just wondering if what I was considering was even possible.

Chipper

1,531 posts

233 months

Sunday 3rd July 2011
quotequote all
otherman said:
Because at the end of the loan you own a house you haven't paid for.
I totally understand the point if the rent covers the mortgage but from my eyes in a lot of cases people seem to be right on the limit when doing BTL properties and that's if they get a fantastic tenant who stays long term.

Taking above I cant see anyone touching the deal. £700 rent when the mortgage is going to near £900 if not more Per month. Then there is general wear and tear to sort out and tax implications on top and then all it takes is one bad tenant and it's all tits up.

I can only see it working if the properties has superb yields but with a property Market going down the pan I just can't see why people do it unless a property is at a fantastic price or has massive potential like a house being turned into multiple flats?




scotal

8,751 posts

295 months

Sunday 3rd July 2011
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flyingjase said:
You will of course get royally bent over on the rate though.
Not really. You won't get as attractive a rate on a btil as you would on a residential deal, but you won't get eaten alive.
(watch the fees however, these are the killer on BTL from some lenders right now.

scotal

8,751 posts

295 months

Sunday 3rd July 2011
quotequote all
Chipper said:
Taking above I cant see anyone touching the deal. £700 rent when the mortgage is going to near £900 if not more Per month. Then there is general wear and tear to sort out and tax implications on top and then all it takes is one bad tenant and it's all tits up.
There are no 88% LTV BTL's at the monet so from that point of view you are right. BTL is usually set up on an interest only basis, so that would take the montlhy payment down a fair way. (The house acts as its own repayment vehicle, so there's no extra cost to take into account there.) The usual rental calc is that the monthly rental income must be greater than 125% of the monthly mortgage payment.
Plenty of longer term BTL'ers have seen low interest rates (A fair number have come off fixed rates onto trackers around 1.5%) mean that whereas before their investments were solely based around capital growth, they are now taking money out of the property every month.

Chipper said:
I can only see it working if the properties has superb yields but with a property Market going down the pan I just can't see why people do it unless a property is at a fantastic price or has massive potential like a house being turned into multiple flats?
Pick the right property, and the market isnt going down the pan, moreover what a number of investment buyers are banking on is a restricted market making rental more attractive (so a ready pool of tenants) and a shortgage or property being built leading to a long term growth in house prices.
A fair number of new investoers are putting money into property becasue they see no return from savings accounts and/or they have a distrust of investment advisors/fund managers/banks generally. You might note the irony in trusting a completely unregulated market like the UK property market over the financial product providers, however a few people I've spoken to would rather feel they have a modicum of control over their investment rather than see management charges being levied whether their funds win, lose or draw.

Mazdarese

21,111 posts

203 months

Tuesday 5th July 2011
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I don't want to hijack, but can anyone recommend a good BTL mortgage provider? A house has come up for sale near my Dad that is an absolute bargain (repossession) and I'd love to get my hands on it.