0116 464 5544
Olivia
Section 21 Controversy Continues as Government Promises Reform
You would be forgiven for thinking that in this day and age, private landlords would have to have a good reason to evict tenants. For an alarming number of private tenants across the UK, this sadly isn’t the case.
Recently highlighted by a BBC report published following a nationwide survey, landlords across the UK continue to use the controversial ‘section 21’ allowance to evict tenants from their homes.
Specifically, Section 21 of the 1988 Housing Act provides private landlords with the right to evict tenants at the end of their current contract, without any specific reason for doing so. They must simply provide two months’ notice of their “intention to evict,” with the tenants being given no say in the matter.
Section 21 exists primarily to provide landlords with the opportunity to evict problematic tenants or those that have fallen behind on their rent payments. Increasingly, landlords are using the Section 21 clause to evict tenants to subsequently sell or let out their properties at a higher price.
Lives in landlords’ hands
The report from the BBC clearly illustrated the effects Section 21 is having on those affected by the controversial clause. One of them was a young family from Weston-Super-Mare, who, after 12 years of tenancy with a private landlord, were handed two months’ notice.
Despite having never missed a rent payment, the Palmers were informed they would have to leave their home.
Having run into multiple hardships over the past few years, the family now fears it will be left homeless. Redundancy and serious illness took a severe toll on the family’s credit rating, resulting in potential private landlords demanding several months’ rent upfront as security. This is money the family simply doesn’t have, putting them at immediate risk of homelessness when their current landlord’s Section 21 notice is enforced.
Like many other families facing similar scenarios, the Palmers expressed their shock at the extent to which so many lives are in the hands of landlords across the UK.
Promised reforms
It’s estimated that last year alone, the so-called “accelerated procedure” for evicting tenants resulted in more than 8,100 repossessions. In all instances, no court hearing was necessary, and the case of the tenants evicted was not heard at a formal legal level.
While some are calling for the rules to be changed to ensure private tenants are given at least six months’ notice prior to no-fault eviction, others believe the system as it exists should be scrapped in its entirety.
Speaking on behalf of the Law Society, Simon Davis directly cited the Section 21 clause as “one of the leading causes of family homelessness in the UK.”
Subsequently, the government has outlined plans to ban no-fault evictions in their entirety in England and Wales. There is currently no specific date as to when the new policy will come into force or the extent of the exclusions that will allow landlords to continue evicting tenants at relatively short notice.
What is Right to Buy?
If you live in a council house or a housing association property of any kind, now could be the perfect time to purchase your home. The government’s Right to Buy scheme provides qualifying tenants with the opportunity to purchase the properties they live in at a significantly discounted rate.
As of April 6, 2019, the maximum discount available under the Right to Buy scheme was increased to £82,800, or up to £110,500 for qualifying properties in London.
For more information or to get your application underway, contact a member of the team at UK Property Finance today.
Why should you buy your home?
Eligibility under the Right to Buy scheme qualifies you for a once-in-a-lifetime price reduction on the property you live in. As much as £82,800 (or £110,500 in London) could be subtracted from the market value of your home, making it a far more affordable purchase. If buying a property through conventional channels isn’t an option, homeownership through the Right to Buy scheme could be well within reach.
Your home has the potential to be the single most valuable asset you will ever own. Right to Buy provides the opportunity to step on the property ladder for the first time while also providing the freedom to alter and improve your home in any way you like.
While there are significant responsibilities to homeownership, it nonetheless proves enormously beneficial for the vast majority of tenants who use their Right to Buy privileges. Eligibility for Right to Buy was recently relaxed from five years’ tenancy to just three years, resulting in tens of thousands of new tenants becoming eligible for the scheme.
There is currently no housing purchase programme in the UK that provides anything close to these kinds of discounts. The price reduction of up to £82,800 (or £110,500 in London) could make your home more affordable than you think.
If you believe you may be eligible for the Right to Buy or have any questions on how the programme works, reach out to a member of the team at UK Property Finance today or use our UK mortgage calculator to work out exactly how much a mortgage would cost you.
Right to buy scheme history
Far from a new programme, the UK government introduced the Right to Buy scheme in 1980. However, significant changes have been implemented over the years, relaxing eligibility requirements and significantly increasing maximum discounts.
Previously, the maximum discount available on a property was just £16,000. Now increased every April to compensate for inflation, the maximum discount now stands at £82,800 across England (£110,500 in London). Lower discounts of £24,000 and £8,000 are available in Northern Ireland and Wales, respectively.
Whether you’re ready to go ahead or simply considering the option of buying your property, we’d be delighted to hear from you. Contact a member of the team at UK Property Finance anytime for an obligation-free consultation.
Helpful Advice That All First Time Buyers Should Be Aware of
Buying a home for the first time can be both exciting and daunting in equal measure. Most first-time buyers have little to no knowledge or experience with the property market and therefore do not know where to start. We recommend using our mortgage calculator in the UK to work out exactly how much purchasing a home would cost you.
Worse still, conflicting information and advice only stand to further complicate the whole thing.
Getting on the property ladder is never easy, but the process can be simplified with a few common-sense guidelines. From those who know the property purchase process better than most, here are a few helpful pointers all first-time buyers should be aware of:
- There are schemes that could save you a fortune.
First and foremost, it is important to leverage any existing schemes or incentives you may be eligible for. Examples of these include Right to Buy and Help to Buy, which, depending on your circumstances, could save you a small fortune on the market value of your home.
- Establish your budget in meticulous detail.
Working out how much you can afford to borrow means taking into account your current outgoings, your lifestyle, and your financial future. It also means ensuring you leave yourself with a little room to manoeuvre, rather than pushing your finances and your budget to breaking point.
- There are mortgages beyond High Street.
Depending on your requirements and circumstances, you could be better off working with an independent lender away from the High Street. From poor-credit first-time mortgages to competitive Right to Buy mortgage deals and so on, there’s an extensive network of lenders to explore beyond the usual major banks.
- Comparison sites are far from comprehensive.
Carrying out an initial online mortgage comparison can be useful. However, the average online mortgage comparison site is not quite as comprehensive as it appears. If you want to gain access to the best deal in the UK from the most dynamic network of lenders, speak to an independent broker for advice. Before doing so, ensure the initial services they provide are offered 100% free of charge.
- With deposits, bigger is better.
If there is any realistic way of pulling together a larger deposit, do it. Along with simplifying the process of qualifying for a mortgage, bigger deposits also pave the way for better deals. Simply by increasing your deposit from 15% to 20%, you could qualify for a much lower rate of interest and save a small fortune over the life of the loan.
- Interest rates are not everything.
Last but not least, it is vital to remember that the overall costs of a mortgage extend far beyond interest rates alone. You will also need to factor in arrangement fees, administration fees, valuation fees, legal fees, closure fees, and (in some instances) early repayment fees. All of which should be considered carefully when evaluating how much you need to borrow and how much you can comfortably afford.
Whether you are ready to go ahead with a first-time buyer mortgage application or simply considering the available options, we are standing by to take your call. Contact a member of the team at UK Property Finance anytime for more information.
Personal Data Security Practices Remain Substandard, Officials Warn
The recent introduction of the General Data Protection Regulation (GDPR) and the Data Protection Act 2018 are apparently having little to no bearing on the personal data security practices of many organisations in the UK. Particularly where insolvency is concerned, practitioners and FCA-authorised firms are still breaching even the most basic and important data protection guidelines.
This week, a joint statement was issued by the FCA, the FSCS, and the Information Commissioner’s Office (ICO) to reaffirm the importance of heightened responsibility when dealing with personal data. The statement outlined apparent widespread data security malpractice, with an emphasis on businesses attempting to unlawfully sell the personal data of their clients to claims management companies (CMCs).
Instances of unlawful personal data sales and distribution (both before and after a firm has gone into administration) are rife, claims the report from the regulators. The statement warns that by distributing personal data without the legal consent of those it concerns, they may be breaching the terms of both the General Data Protection Regulation and the Data Protection Act 2018.
All direct communications carried out by claims management companies could also be a direct violation of the Privacy and Electronic Communications Regulations 2003 (PECR).
The regulators promised to take action against those found to have breached any applicable data protection laws and policies, encouraging those who may be doing so to revisit and reconsider their practices and policies.
A widespread public problem
Meanwhile, the UK’s data protection regulator has come under heavy criticism for failing to sufficiently protect the public from the risks of behaviour advertising, e.g., remarketing or targeted ads, which are ‘systematically’ breaking data protection and privacy laws.
Warnings were issued last summer that the growing AdTech (advertising technology) industry is already out of control, though little action has been taken to turn things around. The Information Commissioner’s Office previously agreed that real-time bidding (RTB) systems used in online advertising may be accessing and using people’s private information unlawfully.
“We have reviewed a number of justifications for the use of legitimate interests as the lawful basis for the processing of personal data in RTB. Our current view is that the justification offered by organisations is insufficient,” commented Simon McDougall, the ICO’s executive director of technology and innovation.
“The Data Protection Impact Assessments we have seen have been generally immature, lack appropriate detail, and do not follow the ICO’s recommended steps to assess the risk to the rights and freedoms of the individual.”
“We will continue to investigate RTB. While it is too soon to speculate on the outcome of that investigation, given our understanding of the lack of maturity in some parts of this industry, we anticipate it may be necessary to take formal regulatory action and will continue to progress our work on that basis.”
Banks Warned as Mortgage Prisoners Promised Help by the Government
Britain’s six biggest lenders have come under fire from ministers this week as the row regarding thousands of ‘mortgage prisoners’ continues to escalate. Treasury ministers issued an open letter accusing the banks of failing to help hundreds of thousands of struggling borrowers get a fair deal on their overinflated mortgages.
Britain’s six biggest lenders have come under fire from ministers this week as the row regarding thousands of ‘mortgage prisoners’ continues to escalate. Treasury ministers issued an open letter accusing the banks of failing to help hundreds of thousands of struggling borrowers get a fair deal on their overinflated mortgages.
New rules were introduced by the UK’s financial watchdog in October last year, designed to simplify the process of switching to a cheaper mortgage for those affected. Four months down the line, no decisive action whatsoever has been taken by any of the six leading lenders in the UK: Lloyds, Nationwide RBS, Santander, Barclays, and HSBC.
Even more worryingly, the new rules will result in only one in 12 so-called ‘mortgage prisoners’ benefiting from a lower-rate deal.
Half a million homeowners were affected.
It is estimated that around 500,000 homeowners across the UK were affected by the sale or transfer of their mortgages to unregulated or inactive lenders in the wake of the financial crash. This subsequently resulted in their mortgages being taken over by a fund or company that cannot or will not offer them a remortgage.
Unable to get a better deal with their loan provider and unable to switch to a new lender, these borrowers have become ‘imprisoned’ by excessively expensive mortgage deals they simply cannot afford. The FCA announced new rules in October last year that would make it easier for those affected to switch to a better deal, but so far nothing has happened.
None of the six biggest lenders in the UK have altered their affordability rules to accommodate those looking to switch to a more affordable mortgage. The government has therefore once again demanded that urgent action be taken by the country’s leading banks to comply with the new rules outlined by the FCA.
‘I have discussed this with Andrew Bailey, chief executive of the FCA, and he is in agreement that these eligible borrowers should have the opportunity to access cheaper deals with new lenders,’ read the open letter written and published by the economic secretary to the Treasury, John Glen MP.
‘Now that the FCA rule changes are in effect, I expect as many of your members as possible to move quickly to offer new deals to this group of eligible borrowers.’
Would the changes actually help?
The FCA has predicted that approximately 170,000 of these ‘mortgage prisoners’ will be able to reduce their mortgage payments by seeking a better deal from a new lender. Unfortunately, the FCA also estimates that no more than around 14,000 of these borrowers will benefit from the new rules and regulations, should they be implemented.
In total, around 156,000 of the borrowers affected have mortgage debts that exceed the market value of their home. As these borrowers are, in effect, in arrears, they would not be eligible for a new mortgage or a remortgage with most lenders.
Independent expert advice
If you have any questions or concerns regarding your current mortgage obligations or your eligibility for a competitive remortgage deal, we’re standing by to help.
Contact a member of the team at UK Property Finance anytime for an obligation-free consultation with a member of the team.
Subprime Mortgages Make A Return
Simply mentioning the words ‘subprime mortgage products” is enough to incite painful memories of the 2007 financial crisis. Prior to 2007, many mortgage lenders in both the United Kingdom and the United States were underwriting loans with minimal checks and, as such, agreeing loans for a wide range of applicants, some of which were completely inappropriate.
The poor underwriting standards initially arrived in the US but were soon implemented in the UK and many other countries as the majority of US lenders expanded around the globe.
It was this excessively risky approach to lending that was credited with fuelling the resulting crash; however, in the years that followed, regulators and mortgage lenders implemented new policies and procedures to prevent history from repeating itself.
The result is a much stricter lending approach and more regimented underwriting processes, making it increasingly difficult for borrowers with imperfect credit to obtain mortgages.
An unexpected turnaround
The 2007 financial crash had no real impact on the number of people looking to purchase homes, so those with imperfect credit were left stranded as the subprime lenders responsible for the irresponsible lending practices quickly exited the market in 2007. The remaining void is being gradually filled by a growing number of specialist UK-based lenders, and now, even if you were declared bankrupt just one year ago, you could still qualify for a mortgage today.
As competition grows among subprime mortgage lenders, interest rates and borrowing costs are also falling. A few past missed mortgage payments are no longer guaranteed to prevent you from gaining access to the mortgage market, and neither is the presence of CCJs on your credit file.
Subprime mortgages: A brief definition
The term ‘subprime’ is a relatively broad term that generally refers to anyone with a credit history considered below acceptable norms. Specifics vary significantly from one lender to the next, but a subprime borrower is always characterised as an applicant who would not qualify for a mainstream mortgage.
Some banks refer to subprime borrowers as ‘adverse or bad credit’ applicants, but the meaning remains unchanged.
One of the few areas where most banks now agree relates to the somewhat outdated nature of the terminology. The UK mortgage market has changed exponentially since 2007 and continues to evolve at a rapid rate. As credit scores become increasingly involved in the decision-making process, the more forward-thinking banks are looking to see the entire category reclassified to the term “specialist lending’. Rather than penalising anyone with an imperfect credit history, they would like to see more factors taken into consideration. Work out how much a mortgage would cost you using our mortgage calculator. UK
Learning from mistakes
The fact that subprime mortgages are once again available does not indicate that the market is again out of control. In fact, quite the opposite. Most lenders continue to impose robust and extensive checks when assessing eligibility for all mortgage products.
What makes today’s lending landscape different from 2007 is the way in which credit history is only one of the deciding factors used by the UK’s specialist lenders.
Regulation imposed by the Financial Conduct Authority and the Prudential Regulation Authority since the financial crash has made it all but impossible for banks and lenders to irresponsibly underwrite. Some products that were widely available before the crash, such as self-certified mortgages, have now been completely erased from the market.
Mortgage lenders are increasingly focusing on proof of provable income, existing debts, and monthly outgoings. They have also provided a general stress test in order to approve applicants (or otherwise) for home loans. As a result, borrowers with a poor credit history who are nonetheless in a strong financial position at the time of application are not automatically discounted from mortgage borrowing.
Is a disaster waiting to happen?
Critics argue that the resurgence of the subprime mortgage market represents a disaster waiting to happen. They claim that any approach to subprime lending flies in the face of responsibility on the part of British banks and lenders. They also believe that what is happening now has echoes of the years leading up to the 2007 financial crash.
Arguments like these entirely overlook the fact that the mortgage lending sector in the United Kingdom is more restricted today than it has ever been. Even if the UK’s biggest banks wanted to engage in risky mortgage lending activity, they’d be prohibited on a legislative level.
“The mortgage industry has successfully implemented regulatory and other safeguards to guarantee that their customers borrow only what they can afford to repay,” read a recent statement from the trade association UK Finance.
“2014’s Mortgage Market Review banned self-certification mortgages, tightened the rules around interest-only mortgages, and required affordability to be checked more stringently.”
For the time being, therefore, there is no direct evidence to suggest that another ‘subprime’ lending crisis is on the horizon. If anything, it remains disproportionately difficult for consumers with an imperfect credit history to qualify for a mortgage, and in the eyes of most major banks and high-street ‘lenders, ‘subprime’ borrowers continue to represent a risky investment that they will not accommodate.
A small victory for common sense
Consumers with imperfect credit have always argued that credit scores provide a flawed overview of a person’s financial status and activities. You could have a terrible credit score yet be sitting on a personal fortune of millions.
You could also have made a few minor mistakes years ago, but you have conducted your finances in an exemplary manner since.
Blemishes on your credit report currently remain visible for six years. Irrespective of your financial status and subsequent responsibility, it is evident for that period. Thankfully, some of the UK’s more dynamic lenders accept these flaws in your credit rating, provided other areas of your finances are being handled correctly.
Most lenders are still afraid to use the term subprime mortgage but readily accept applications from those with ‘imperfect’ credit or borrowers looking to improve their credit score.
The largest and most established UK mortgage lenders, however, are still, for the time being, steering clear of subprime lending entirely.
A market of growing relevance
The market for subprime mortgages in the UK currently exists as a strictly ‘not on the High Street’ lending channel. You cannot simply walk into a branch of a major lender with poor credit and expect to be offered a mortgage deal. They would be unlikely to offer you any kind of credit facility, so major loans and mortgages would definitely be out of the question.
UK subprime lenders continue to operate primarily in the specialist lending sector and are typically accessed through a specialist broker. Subprime products and services are tailored to meet the unique requirements of the individual borrower.
Even with a heavily damaged credit score, all applications are considered on merit. Imperfect credit often equates to higher overall borrowing costs, but it is still perfectly possible to access a competitive deal. With some consumers struggling to maintain perfect credit scores, subprime mortgages are becoming increasingly relevant in the UK. Working with a specialist mortgage broker means gaining access to an extensive ‘alternative’ loan market that is not generally available on the high street.
Getting a Mortgage on Maternity Leave
Maternity leave can be a challenging time in life, during which expectant mothers face a variety of unique and ongoing challenges. It can also be a time during which it is more difficult than normal to successfully qualify for credit.
When approaching maternity leave, it is common to experience the following concerns:
- Will maternity leave affect your eligibility for credit?
- Do you have to tell your lender you are on leave?
- How much can you borrow on maternity leave?
- What if you are a self-employed worker?
- How will additional credit issues impact your eligibility?
- What kind of deposit will I need to pay?
- Which other factors are considered by lenders?
At UK Property Finance, we offer specialist advice and support for borrowers both approaching maternity leave and already off work. For more information or to discuss your requirements in more detail, contact a member of the team for an obligation-free consultation.
Does maternity leave affect eligibility for a mortgage?
The short answer is yes, though for reasons that are not entirely justified. Most major lenders simply assume that when you go on maternity leave, you take a significant pay cut while doing so. Employers are not legally obliged to ensure you receive 100% of your salary while away from work, though some make voluntary contributions to maintain their employees’ salaries. This is not always taken into account by major banks and lenders.
Many high-street banks consider applicants on maternity leave to be higher-risk clients than typical applicants. This is because a moderate proportion of those who go on maternity leave each year do not return to full-time work afterwards. Some take on part-time work to dedicate more time to their families, while others choose not to return to work at all.
Maternity leave can affect your eligibility for a mortgage, but it is still perfectly possible to qualify for a competitive deal. It is simply a case of supporting your application with as much evidence as possible to convince the lender you are a low-risk candidate. evidence such as:
- Proof of your intention to return to work
- The approximate date of your return to work
- The terms and conditions of your job
- How many hours will you be working, and what is your salary?
- A reference letter from your employer
Each of the above could help improve your eligibility for a mortgage on maternity leave.
Do I need to tell the bank I am on leave or going on leave?
It is not standard practice for banks and lenders to ask applicants if they are on maternity leave or approaching a period away from work. In theory, it is your obligation to ensure you tell the lender if you are pregnant or already on maternity leave. Even if doing so affects your eligibility, it is essential that you do not hide this information.
This is because doing so could invalidate the terms and conditions of your loan agreement and render the contract void. It could also amount to the falsification of information or the deliberate provision of incorrect or incomplete information. It is almost certain that your lender will find out you were pregnant and/or on maternity leave, at which point you could face problems.
Policies and criteria for eligibility vary significantly from one lender to the next. Irrespective of how it may affect your application, you must let your lender know that you are pregnant and/or on maternity leave.
How much can I borrow if I am on maternity leave?
Your maximum allowance will be calculated in roughly the same way as any conventional mortgage. The lender you apply to will consider various criteria when determining how much you can borrow, including but not limited to the following:
- Your current annual salary
- Your reduced salary while on leave (if applicable)
- Your general financial position
- Your current debts and outgoings
- Your intentions for the money
- The size of the deposit you provide
- Your recent credit history
Your eligibility and the amount you are able to borrow may also be influenced by your partner’s financial status if you are applying for a mortgage together. In some instances, the second applicant’s strong financial position and good credit history can compensate for issues and oversights on the part of the other applicant.
There are no specific limitations as to how much you can borrow. Depending on the lender you work with, you may be offered anything from 3X to 6X your annual salary. In the case of joint applicants, this could be up to six times your combined annual earnings. You will also gain access to larger loans by offering a larger deposit where possible.
What if I am self-employed and on maternity leave?
Many major banks and lenders throw additional obstacles at self-employed applicants. This counts double for self-employed individuals also on maternity leave, who may find their applications particularly heavily scrutinised.
Supporting your application as a self-employed worker means providing as much evidence as possible of your strong financial performance, your responsible financial history, and the fact that you intend to return to work. If you are a sole trader, it can be difficult to prove your future intentions. If you run a larger business with other employees, lenders may assume your income and employment status will not be adversely affected by your maternity leave.
Underwriters often make it difficult for self-employed workers to qualify, but not impossible. It is nonetheless important to ensure you target only the most appropriate lenders for your case. If you are self-employed and on maternity leave, it is highly unlikely that your application will be accepted by a mainstream bank or lender.
Can I get a mortgage on maternity leave with bad credit?
Bad credit alone is enough for most major lenders to deny mortgage applications. It is comparatively rare for any mainstream bank to even consider applicants with poor credit. As you are also on maternity leave, you have very little chance of qualifying for a mortgage with a typical high-street bank.
This is why it is important to ensure you direct your applications to specialist lenders who consider clients on the basis of their overall financial position. Having bad credit and being on maternity leave do not necessarily make you a higher-risk applicant. If you are in a strong financial position and can comfortably afford the repayments on your mortgage, there is no reason why you should not qualify.
Every unsuccessful application you submit to a major lender could inflict more harm on your credit history. That is why we strongly suggest carefully considering your credit score and your overall financial status before applying for a mortgage.
No matter how challenging your position may be, we can help. Even if you have been turned down for a mortgage elsewhere, there is a good chance you will find the help you need from an independent, specialist lender. At UK Property Finance, we provide a whole-market brokerage service for applicants from all backgrounds. With our help, you will find it quick and easy to find the perfect mortgage to suit your requirements and your budget. Contact a member of the team at UK Property Finance anytime to discuss your requirements in more detail. Work out the costs of a mortgage using our UK mortgage calculator.
How Many Mortgages Can I Have at the Same Time?
Successfully applying for even a single mortgage can be a challenge, but exactly how many mortgages can you take out at the same time? Assuming you have a good reason for purchasing more than one property, how many mortgages can you realistically expect to be offered?
The short answer is As many as you like! If you meet the necessary criteria, there is nothing to stop you from applying for any number of mortgages. Before doing so, however, we strongly suggest seeking independent expert advice.
Qualification criteria to consider
The process of applying for additional mortgages can be slightly trickier than applying for a conventional mortgage. Some lenders simply do not offer second-home mortgages to any applicants under any circumstances. Others will restrict the number of properties allowed in your portfolio, while there are those who impose unique conditions regarding your intended use or occupancy of the property. Every lender has its own unique policies as far as multiple mortgages are concerned, some being far more restrictive than others.
The primary criteria that will determine whether your application passes the first stage will be the same with every lender. The most important examples of this include the following:
1: Can you afford the mortgage alongside your existing debts? When applying for multiple mortgages, it is not quite as simple as just assessing your income, your financial status, and so on. The lender will also need to ensure that you are well on top of your current mortgage debts and general outgoings, which may require additional supporting evidence.
2: Is your track record and credit history up to par? Specialist lenders tend to be far more flexible where issues like imperfect credit are concerned. You will always be expected, however, to provide evidence of a reasonably strong, stable, and responsible financial track record.
3: To what extent will the proposed investment pose a risk? It is the norm to be asked for clarification of your intentions for the property you intend to buy during the application process. Your lender will carefully consider the potential risk and exposure of the investment, both immediate and long-term. For example, if you are looking to buy a property in a block that is falling apart or in any way blacklisted, you may be turned down.
4: What are your expectations? It sounds obvious enough, but the lender will also want to make sure that you know what you are getting yourself into. Diving headfirst into property investments, particularly where buy-to-let is concerned, without careful consideration can prove disastrous. It is not all about the money; you also need to ensure you know what you are doing and have a good reason for doing it.
How many buy-to-let mortgages can I have?
The rules regarding buy-to-let mortgages are subject to the same rules and restrictions as multiple mortgages. If you are able to demonstrate the strength of your financial position and your capacity to comfortably repay the loan, you will most probably qualify.
Most buy-to-let lenders base their lending decisions on the rental income projections of the property in question. Hence, your eligibility may be determined (to some extent) by the monthly rent you intend to charge and your profit potential.
Borrowing with no proof of income
It is not always necessary to provide any personal proof of income to qualify for a mortgage. If you own and operate one or more buy-to-let properties in the UK, your eligibility may be assessed primarily or even exclusively based on your rental income. If your combined rental income from multiple properties covers the costs accordingly, you may be able to qualify for another mortgage with no personal proof of income whatsoever.
This is something that varies significantly from one lender to the next. The more complex your case, the greater the importance of taking your business to independent, specialist lenders. Where multiple mortgages are concerned, you may find it difficult to have your case heard fairly by a mainstream bank or lender.
How many ‘main residences’ can I have?
Along with your financial status and general track record, the type of mortgage you apply for will affect how much you can expect to pay. Anyone who applies for a second residential mortgage will be required to nominate one of the properties as theirmain residence’. This is because residential mortgages on a main residence are usually (though not always) the cheapest mortgages on the market.
Mortgages taken out on properties with other purposes in mind—buy-to-let, commercial applications, etc.—can be more expensive.
This doesn’t mean it is impossible to have more than one residential mortgage. For example, if you intend to purchase a second property to use as a weekend home in another location, you may qualify for a second residential mortgage. The same also applies if you would like to buy a property located closer to immediate family members but do not wish to sell the home you live in.
Multiple commercial mortgages
There are technically no specific restrictions regarding how many commercial mortgages you can have. Taking out a commercial mortgage follows the same basic principles as a residential mortgage, though usually with significantly higher deposit requirements. The lender will carefully consider your intentions for the property and the extent to which your proposed investment represents a risk.
Depending on your intentions for the property, your lender may request evidence of your experience and expertise in the business area in question. This can raise additional challenges for investors branching out into something new, though it doesn’t necessarily count you out of the running.
Commercial mortgages in general can be trickier to apply for than residential mortgages, calling for independent expert support throughout the process. Whether you are planning ahead or in need of urgent support with a time-critical issue, we’re standing by to take your call. Work out the costs of a mortgage using our UK mortgage calculator.