Property, BTL what happens at end of fixed rate
Discussion
I've been reading on here about revaulations and that the mortgage company have a right to demand say £50k within 14 days as the loan is higher than the value of the property, but is it in the interest of the initial mortage Co to have it revauled or just switch to varible as they will lose an income if the property is repoed, or is it general mortage co rules that it must be revauled as this has not happened in the past...just thinkin because if so a lot of Landlords who have bought in the last 2/3 years will be complety buggered with that demand alongside the rise of interest...
snotsnfarts said:
I've been reading on here about revaulations and that the mortgage company have a right to demand say £50k within 14 days as the loan is higher than the value of the property, but is it in the interest of the initial mortage Co to have it revauled or just switch to varible as they will lose an income if the property is repoed, or is it general mortage co rules that it must be revauled as this has not happened in the past...just thinkin because if so a lot of Landlords who have bought in the last 2/3 years will be complety buggered with that demand alongside the rise of interest...
Having it revalued is one thing, demanding part repayment is another. Revaluation tells then the LTV and that can determine the interest rate, but are you sure it can lead to a part repayment demand? Well you can't go to another company as it must be revalued, so then you are over a barrel having to stay with the original mortgage company who if they wish can increase the varible rate to whatever ( i think) the market will bear to recover "other loses", or insist on a revaluation as most mortage agreements can insist that you must payback the difference between value and agreed percentage loan, hopefully someone with a greater knowledge of mortgages will be able to answer this.
Also, as far as I know the important point to remember is that BTL mortgages are commercial loans and are not typical home loans regulated by the FSA. In other words the relationship with the lender is likely to be more, ahem 'business like'.
Lets also remember that the government are putting the banks etc under a lot of pressure to disclose the extent of their exposure to potentially toxic debt therefore the banks need to be clear about who is likely to default and what their exposure is in the case of default.
That's my take on it anyway.
Lets also remember that the government are putting the banks etc under a lot of pressure to disclose the extent of their exposure to potentially toxic debt therefore the banks need to be clear about who is likely to default and what their exposure is in the case of default.
That's my take on it anyway.
Edited by Olf on Friday 3rd October 07:37
Commercial LTVs are being skated around at the moment. Everyone knows they have dropped, possibly to untenable levels but the banks dont want to look - why would they want a pile of repossessed or forced sales on their hands when there are a) no buyers and b) the loans are being serviced. A large proportion of commercial loans need refinancing in the next 3 years anyway, so they will naturally be revalued and new arrangements made. At the moment though, the genie is staying firmly in the bottle.
This is from someone who is set to do quite well if a large proportion of commercial properties are revalued. We have hardly seen any being formally looked at yet.
This isnt BTL houses - but commercial property loans.
This is from someone who is set to do quite well if a large proportion of commercial properties are revalued. We have hardly seen any being formally looked at yet.
This isnt BTL houses - but commercial property loans.
You will end up like my landlord. Rolling on to the default rate and unable to remortgage as they took 100% last time to buy more houses.
They are currently having to pay £600p/m on top of what I pay in rent to cover the mortgage, whilst trying to sell it for £60-80k over what even the estate agents say it's worth!
They are currently having to pay £600p/m on top of what I pay in rent to cover the mortgage, whilst trying to sell it for £60-80k over what even the estate agents say it's worth!
_daveR said:
You will end up like my landlord. Rolling on to the default rate and unable to remortgage as they took 100% last time to buy more houses.
They are currently having to pay £600p/m on top of what I pay in rent to cover the mortgage, whilst trying to sell it for £60-80k over what even the estate agents say it's worth!
Maybe time to make them an offer?They are currently having to pay £600p/m on top of what I pay in rent to cover the mortgage, whilst trying to sell it for £60-80k over what even the estate agents say it's worth!
_daveR said:
They are currently having to pay £600p/m on top of what I pay in rent to cover the mortgage, whilst trying to sell it for £60-80k over what even the estate agents say it's worth!
Keep us posted on this .. i need stuff like this to cheer me up whilst i sip my vendor-machine tea and, erm, staring at stuff on my computer.anonymous said:
[redacted]
if it is somewhere nice, he would have paid top dollar(rouble) for it - shafted each and every way.Edited by fido on Friday 3rd October 09:52
Maxf said:
Commercial LTVs are being skated around at the moment..........the banks dont want to look.......At the moment though, the genie is staying firmly in the bottle..............
Sorry, there's a team of eight lawyers looking at this very issue at the moment in my mate's department.I'm afraid you're kidding yourself.
Edited by Vesuvius 996 on Friday 3rd October 09:57
anonymous said:
[redacted]
Your hopes will be dashed then - the cost of borrowing without them is substantially higher in general. I see very few instances of cases without personal guarantees (though strangely it's been on the up the last few months...)anonymous said:
[redacted]
varies massively, anything from 6.25% to 8.25% typically for 2 to 5 year old mortgages.
The reversion rate is usually set in the original mortgage offer (you don't take a BTL mortgage for the fixed rate only, you take it for 25 years or whatever with the first x years fixed, the remaining at x over base / libor) so they can't just up it willy nilly if they don't like the LTV. I'd not put it past them to be able to change it through legal wrangling but it's not going to be simple.
Of course, it's only usually the banks (and just a couple of BTL specialists) that have the revaluation clause in the mortgage anyway - and any smart investor wouldn't have BTL money through a bank anyway.
Edited by Davi on Friday 3rd October 10:24
anonymous said:
[redacted]
They've got the money from BTL specialists. Cheaper, better suited to the needs etc. In 7 years of financing BTL's I've put TWO deals with a bank, I'm working on my third at the moment through lack of options.If you doubt that's the way the loans are drafted, I've got a filing cabinet and several thousand further files in storage that could appease your doubts. x over libor is used, yes (which is typically showing reversion rates of 7.3% - 8.3%, x typically between 1% and 2%), but just as many lenders used x over bank base - giving the lower end of the spectrum. SVR and high values for x were quite rare up until about 6 months ago when we started seeing the shift. People taking out loans now will have to face these problems at the end of the fixed period, but those that are just coming off rates generally won't have as much of an issue. In fact the biggest problem facing me at the moment is I can't on-sell new products to those coming off fixes as they are quite happy to sit on the reversion rate to see how it pans out.
Of course if bank base starts to rapidly climb, now that's a different matter...
cjs said:
_daveR said:
You will end up like my landlord. Rolling on to the default rate and unable to remortgage as they took 100% last time to buy more houses.
They are currently having to pay £600p/m on top of what I pay in rent to cover the mortgage, whilst trying to sell it for £60-80k over what even the estate agents say it's worth!
Maybe time to make them an offer?They are currently having to pay £600p/m on top of what I pay in rent to cover the mortgage, whilst trying to sell it for £60-80k over what even the estate agents say it's worth!
Toyed with telling them that the rent needs to go down but didn't do it in the end. Yes, they need us more than we need them but I'm happy to let them sweat for longer. It's circa 5 months now and not one viewing, plus if they expect me to clean and tidy for any viewings then they can take a long walk...
Gassing Station | The Pie & Piston Archive | Top of Page | What's New | My Stuff