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Our property investment expert is Jeni Browne, Sales Director at
Mortgages for Business
www.mortgagesforbusiness.co.uk
Tel: 0345 345 6788
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Question
Funding a renovation project
I am looking at buying a property to rent out as a buy-to-let but to save money, I am hoping to purchase a ‘doer upper’.
I have £70,000 in savings to cover the deposit, the work and to provide extra funds I am hoping to do large parts of the project myself (I am in the trade so have lots of experience). I will be doing this in my spare time and therefore expect it to take a year.
What I need to know is, do I get a residential mortgage and switch to a buy-to-let after a year or is there a buy-to-let mortgage which will enable me to make the improvements before letting it out?
Answer
A residential mortgage is to fund a property which you will live in, so this doesn’t sound like it would fit for this project.
A buy-to-let mortgage will require the property to be lettable, in the condition it is in when the lender’s surveyor visits, so again, this doesn’t feel like quite the right match. My clients who look at something like this will take a refurbishment loan (essentially a bridging loan), where there is a pre-agreed buy-to-let mortgage ready to kick in once the works are complete.
Whilst the rates may feel expensive compared to a traditional mortgage, they are designed for exactly this type of situation and work well.
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Question
Preparing to remortgage – what should I do?
I am about to remortgage on a property which I let out to tenants. It’s been five years since I took out my mortgage on the property initially.
Do I need to do anything to the property before I remortgage? I have no concerns about filling the tenancy. However, do I need to check anything – the EPC, boiler etc? Is there anything I can do to improve my chances of getting a better deal?
Answer
If the property is in good repair and has an EPC rating of E or above, then there really isn’t anything for you to do to the property.
What you will need to know is an idea of its current value. To improve your chances of getting a better deal just make sure you have been timely with your payments on any type of borrowing, that you have all of your paperwork up to date (eg bank statements, payslips, tax returns etc) and always speak to a mortgage broker, who will be able to get a view on the whole market to advise you of the best pricing on offer.
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Question
Can I get a mortgage with bad credit history?
I have been left some money in an inheritance and it’s enough to put down a very healthy deposit on a buy-to-let.
In fact it would work out as around 50%. Unfortunately, I have had some problems in the past with debt – nothing serious, but my credit score is not the best.
I own a house with my husband at the moment and his salary is more than enough to cover the mortgage so we didn’t have problems with that application. However, this application will be in my name only. Will I be eligible for a mortgage?
Answer
It’s very hard to answer this without seeing the credit report, as the term ‘bad credit’ covers an incredibly wide rate of issues. Likewise, your credit score could be low for many reasons.
What I would say is that we are generally able to help clients as long as they have not missed a mortgage payment within the last 12 months, and that any CCJs and defaults are satisfied. On this basis, I would like to think that you would be able to get a mortgage.
The best advice I can give you is to obtain a copy of your credit file and put this in front of a mortgage broker, who can help to you to understand why your score is low and advise on your available options.
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Question
How to transfer to a buy-to-let
Due to Brexit my family and I are relocating later this year to Europe. We own a house which we love and are very sad to leave but the situation is what it is.
We don’t want to sell it just yet as we aren’t sure how things will pan out in our new home so we have decided to rent it out for the short term, initially.
The problem is, we are being forced into this situation and would have no interest in becoming landlords otherwise so we are real amateurs. Will we need to transfer to a buy-to-let mortgage, and – if so – will we need to provide any paperwork to support our application?
Answer
I am really sorry to hear that your family is having to make such a big move. I just hope that you settle into your new lives quickly and seamlessly. You have two options here. The first is to contact your existing lender and ask if they will grant permission for you to rent your property out.
Most lenders will do this and will usually charge a very small fee for doing so. The second option is to remortgage onto a buy-to-let – if you go down this route, the lender will invariably want to see proof of income (three months’ payslips and p60), three months’ bank statements and proof of ID and address.
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