Here are some frequently asked questions which our clients often ask us and we hope you will find useful.
Whilst it is not impossible, it can be more difficult – lenders are less likely to lend on these properties because of issues that come with living above shops. That being said, they may still lend to you if the property is in a desirable location or if the shop below is unlikely to produce much smell or noise. Our aim is to make sure we find the best lender for you, and the first step is to thoroughly research the property.
To produce an Agreement in Principle (often referred to as a ‘Decision in Principle’) the bank or lender will have to do a credit check. Some lenders will only carry out a ‘soft’ credit check, which will not leave a footprint on your credit file, so it may be that we recommend those lenders over others who instead carry out a ‘hard’ credit check. 1-2 footprints left by hard credit checks are not harmful, but any more could start to affect your credit rating, so we will always keep you informed when we apply for an AIP.
We would first advise that you contact your bank about this. Depending on their answer, you may find that your next option is remortgaging to an interest-only product from another bank – just remember that you will need a repayment plan in place.
Instead of doing this, we recommend converting your buy-to-let mortgage into a residential mortgage. If you want to discuss this further, please do not hesitate to give us a call.
Some lenders may allow you to list your property on AirBnb, but the majority currently do not. We would therefore advise that you contact your mortgage provider directly and query this, or check in their terms and conditions, as proceeding without checking may have repercussions should it be a breach of their mortgage conditions. It could also potentially invalidate your home insurance, so should any damage occur when guests are occupying the property, you may not be covered for the cost of repairs. This being said, lenders are beginning to acknowledge the ongoing changes and we are beginning to see more high street lenders allowing Airbnb letting. Lenders in the wider BTL market have started accommodating the changes by extending their existing Holiday let criteria, whilst others are in the process of developing new mortgage products to allow for AirBnb letting. All of these are great, and can only mean good things for borrowers in the future.
In the past, holiday-let mortgages have only really been offered by Building Societies, but more recently, specialist BTL lenders have entered the market, providing investors with more choice. If you are looking at this as an option, there are various factors that should be taken into consideration, the most important one being demand of the location. Since a holiday let is seasonal, for much of the year you won’t be earning any income, so you must make sure enough income is made during the holiday season to cover the cost of the mortgage repayment. Furthermore, a lot of lenders place restrictions on how much of the year BTL holiday homes can be let or used for personal use, so you should make sure to contact a solicitor to see if these restrictions are in place on the property you are interested in. It may also be that we recommend contacting a local letting agent to oversee the management of the property, especially during holiday season. Here in the UK, Brexit may have left a question mark over the economy but the popularity of ‘staycations’ continues to increase, and more properties are becoming available for purchase in popular holiday destinations due to relaxing local planning laws. Not only this, but there has also been an increase in the amount of tourists as UK holidays become cheaper due to the weakening of the pound.
In order to meet market demands, lenders have started offering expat mortgages in the past few years, where before, these were mostly provided by Building Societies. Expats are often strong borrowers to lenders due to the good income and low outgoings, so as long as the lender isn’t concerned by where the borrower is a resident, the borrower will usually have a good chance of their application being successful. As with a normal buy-to-let mortgage, lenders search for rent to support the mortgage, along with the usual financial strength of an expat borrower adding to this. (I don’t understand this sentence well enough to re-word it). Whilst more lenders are beginning to offer buy-to-let mortgages to expats, the often tricky part tends to be getting the mortgage approved while not being a UK resident. We, along with the lender and solicitor must thoroughly carry out all due diligence, including proof of employment, income and expenditure, as well as proof of id and residence. Although this should be done with original documentation, there are some ways in which we could offer some help. Our aim is always to seek out the lenders most appropriate to your needs and requirements and guide you through the process to help you succeed in your application. You should be aware that, because of the extra work needed to approve an expat mortgage and the higher-risk nature of it, the fees and interest rates of your mortgage as an overseas borrower will be higher than normal BTL mortgages on the market. We are more than happy to discuss your options on variable or fixed rate mortgages once we have established your choice of lenders.
We will always first recommend seeking advice from a tax adviser or solicitor, then we will be able to help you put the right finance in place, based on their advice. Buying a home abroad is slightly different – the size of the mortgage and location of the property in particular dictate which lenders would consider your application. We are starting to see more brokers who are specialists in overseas mortgages, and they will liaise with banks abroad to arrange your mortgage. We would also be more than happy to assist you in borrowing against your UK property and paying for your overseas property. To ensure that you are aware of any restrictions on the ownership of properties abroad, we would recommend seeking legal advice in the location of the property.
Don’t worry, many people looking for a mortgage are confused by this, but we will happily break it down for you! As long as you pay your bills, loans and credit cards on time, and stay within limits in your overdraft, there shouldn’t be a problem, as lenders look at your credit score as a whole. What they will look at is your regular outgoings like Direct Debits, pensions, school fees and insurance costs as they want to see how much of your monthly earnings is already going out. What lenders don’t like to see is transactions for gambling, payday loans and things like large staggered cash withdrawals during one night (suggesting irresponsibility when under the influence), but spending small amounts on everyday transactions shouldn’t be a problem. It is a really sensible idea to live and spend as though you already pay a mortgage three months leading up to applying, just to banish any doubt you may have about how your spending habits may affect your application. It will also get you in the habit of budgeting which helps when you are paying off your mortgage! We would also recommend checking your credit score with a reputable company such as Experian, Noddle or Equifax, as this will let you know if there are any outstanding concerns, and will provide you with a credit score. If you have any questions at all about this, please speak to us and we will help you find the best lender and product for your situation.
Absolutely, remortgaging is often a fantastic way to raise funds to go towards your next purchase, as long as you have sufficient equity in your current home.
Although it can be more difficult, it is still possible, and it is our job to assist you in finding the best lender who will consider all other factors, not just your credit rating. The first important thing to know is that there are lenders who will “credit score” and those who will “credit search”. Lenders who credit search are much less likely to have problems with a poor credit rating as they simply look to see if you have any bad debt. Some lenders may choose to offer you a mortgage even if you do have bad credit, but you should prepare to pay a higher interest rate, and potentially a larger deposit. If you are at all uncertain, be sure to give us a call so we can discuss your options with you.
Each lender works differently – some will look at up to 4 incomes/outgoings and then calculate your affordability, whilst others might use the 2 highest incomes. To gauge a rough idea of the amount you might expect to borrow, you can add up all of your incomes and multiply them by 4.5.
We can, but there are some things you should bear in mind. Getting a mortgage on a property off-plan works similarly to a normal mortgage, but with the obvious difference that the valuation will be based off the developers plan instead of the actual building. Upon completion of the build, the valuer will need to visit the property to confirm it is habitable and the value is correct. In the case that the build is not due to be completed for over 12 months and the mortgage offer expires, you would have to re-apply for the mortgage. We understand that this can be difficult if your mortgage offer is not accepted as expected later on in the build, but we are here to assist you through the whole process, and make sure you are always confident in your mortgage application status.