Let-to-buy mortgage refused - broker at fault?

Paintedocean · 2022-10-12T08:35:38+00:00

Realise you can’t be complacent with the financial situation as it is but I was confident I would secure a reasonable deal. LTV is c 35%; I have no debts other than mortgage; Credit rating is high (999 on Experian); regular use of a credit card which is paid off monthly. Take home salary is over £2000. Tenant has moved in - done through an agent, standard tenancy agreement, 18 months @ £1700 which easily covers mortgage and expenses. I’m moving in with my partner so not buying another property and this apparently is the problem for many lenders. Broker selected Leek as according to her they are one of the few for whom this wouldn’t be a barrier and now - after 8 weeks of waiting - I’ve been told they won’t give me the 5 year fix I was originally offered because I’m not buying. Have offered a discounted tracker instead. At no point have I been asked for any proof that I have a tenant despite the broker saying the lender’s concern is that I will be living in the property. AIBU in thinking I’ve been massively let down by the broker and is there any point in contacting the building soc myself?

Eastangular2000 · 12/10/2022 09:39

Well you applied for a let to buy when you aren’t buying, what did you think would happen? Is the property mortgaged at present and do you have permission from your current lender to let it out?

Original poster

Paintedocean · 12/10/2022 09:44

as I understand it the term let-to-buy is the term they use when you already own the property and have lived in it as your home - ie you are an accidental landlord rather than setting out to buy a property with the sole intention of letting it out.

prop is mortgaged and I’ve informed the current lender that I’m now renting out and remortgaging

OP posts:

NoSquirrels · 12/10/2022 09:50

I don’t understand what you were trying to do.

You bought a flat with a mortgage as an owner-occupier.

You moved out to live with your boyfriend and let the flat to a tenant. You told the existing residential mortgage company that you now are renting it out - they gave you permission to let.

Now you want to remortgage onto a BTL deal? Is that correct?

Let to buy is when you own a property, want to buy a second property (usually to live in) and retain the first property. As you’re not buying a new property it’s just a BTL deal you need. But it’s probably cheaper to keep your existing mortgage with the permission to let until the point you absolutely need to remortgage.

NoSquirrels · 12/10/2022 09:52

I can’t tell if it’s the broker at fault or you have miscommunicated somehow because you should never have been trying to get a let to buy mortgage.

Topee · 12/10/2022 09:56

You went for the wrong type of mortgage. Can you not just request permission to let from your current lender?

StillNotWarm · 12/10/2022 10:01

Can you not get consent to let from your existing lender?
LTB is not what you are doing.

Original poster

Paintedocean · 12/10/2022 10:04

Thanks for responding- I’m desperate for some advice…

I bought the property with a mortgage and have lived in it for 15 years.

I always intended to re-mortgage as was paying SVR and wanted to fix given rates going up. I began the process of remortgaging almost 3 months ago and started the letting process shortly afterwards - I didn’t anticipate it taking so long.

I’ve kept my current lender informed and they accept that I have a tenant (he only moved in 3 weeks ago) and am in the process of remortgaging. Didn’t want to stay with them as their rates weren’t favourable compared to the rates quoted by the broker.

Broker was adamant that because I’m not buying another property that the product would be a let-to-buy rather than BTL. I’m using London and country.

OP posts:

Vegasdreaming27 · 12/10/2022 10:08

London and country aren't great for anything other than the simplest of cases. I would switch to a broker with experience in buy to let mortgages.

Angelicapickles1 · 12/10/2022 10:14

Yeah that's a btl mortgage you need as you are paying a mortgage to let it out. LtB you use the money from the mortgage to pay for another property but the amount borrowed is based on rental amounts and not salary like a standard mortgage.

TheArtfulScreamer1 · 12/10/2022 10:14

I was in your circs a few years ago an accidental landlord letting my former home to move into rented with a partner and I got a buy to let mortgage, there are a few companies that won't do a buy to let without you having your own residential mortgage but also quite a few that will I've never struggled to change deal. All my mortgages have been done through L&C with no issues.

Buteverythingsfine · 12/10/2022 10:18

That's really poor, go with a different broker, ring them and get direct advice right now, as the rates are climbing up and up.

NoSquirrels · 12/10/2022 10:26

I think the issue might be that you want to use your income in the mortgage calculation (residential mortgage), rather than the rental yield (BTL).

You need to be clear what you’re asking the broker to do and why.

Presumably the rental yield on your flat is not high enough for a BTL mortgage? After 15 years I’m surprised you only have 35% LTV - that could be part of the problem.

Talia99 · 12/10/2022 10:29

NoSquirrels · 12/10/2022 10:26

I think the issue might be that you want to use your income in the mortgage calculation (residential mortgage), rather than the rental yield (BTL).

You need to be clear what you’re asking the broker to do and why.

Presumably the rental yield on your flat is not high enough for a BTL mortgage? After 15 years I’m surprised you only have 35% LTV - that could be part of the problem.

Doesn’t 35% mean she’s paid off 65%? If so, that sounds pretty good after 15 years.

Original poster

Paintedocean · 12/10/2022 10:30

NoSquirrels · 12/10/2022 09:52

I can’t tell if it’s the broker at fault or you have miscommunicated somehow because you should never have been trying to get a let to buy mortgage.

thanks NoSquirrels - the broker was 100% clear about my situation, which surely can’t be that unusual…

I live in and own a property; decide to move in with partner so rent property out with no need to buy another property.

I queried it with the broker and they reassured me that let to buy was appropriate for my situation and that BTL wasn’t as I already owned the property.

hope you don’t mind me asking - do you have professional knowledge of this?

OP posts:

NoSquirrels · 12/10/2022 10:32

NoSquirrels · 12/10/2022 10:26

I think the issue might be that you want to use your income in the mortgage calculation (residential mortgage), rather than the rental yield (BTL).

You need to be clear what you’re asking the broker to do and why.

Presumably the rental yield on your flat is not high enough for a BTL mortgage? After 15 years I’m surprised you only have 35% LTV - that could be part of the problem.

Sorry, on the 35% LTV. You’re saying you have a great deal of equity (e.g. flat worth £100K, mortgage needed 35K)? Is that right? Which obviously wouldn’t be an issue at all.

NKFell · 12/10/2022 10:33

Angelicapickles1 · 12/10/2022 10:14

Yeah that's a btl mortgage you need as you are paying a mortgage to let it out. LtB you use the money from the mortgage to pay for another property but the amount borrowed is based on rental amounts and not salary like a standard mortgage.

I came to say this. So I'll just quote instead!

Talia99 · 12/10/2022 10:33

I have to agree, I can’t see how this is a let to buy, since you aren’t buying anything.

It sounds like a fairly standard buy to let where the issue is whether the rent and your other income covers the mortgage.

You may have grounds for a complaint against the broker. If I’m not wrong about the way the mortgages work (and I may be, I’m no expert), he’s gone for completely the wrong sort of mortgage.

I would assume a let to buy has better rates because there are two properties for security? The let property and the bought property?

Shamoo · 12/10/2022 10:34

You need a buy to let. I did a let to buy when we moved because we remortgaged the old house to take equity for the new one, and then rented out the old one. That’s let to buy. Once we had moved, when it became time to remortgage the old house again (fix ended), it became a buy to let mortgage.

My friend has just rented out her place and moved into a rental, with a buy to let.

Original poster

Paintedocean · 12/10/2022 10:34

Talia99 · 12/10/2022 10:29

Doesn’t 35% mean she’s paid off 65%? If so, that sounds pretty good after 15 years.

Show quote history

Yes - my mortgage is £155,000 against value £435 - 450,000. Rent is £1700 pcm so surely figures are good?

OP posts:

NoSquirrels · 12/10/2022 10:40

I live in and own a property; decide to move in with partner so rent property out with no need to buy another property.

It’s not that unusual a situation. But most people doing this just get permission to let from their existing residential mortgage lender. It’s usually granted for a time-limited period e.g. 3 years and adds a couple of per cent to the mortgage rate. That still usually works out cheaper than a new BTL mortgage. And it’s usually the pragmatic choice because what if your new relationship goes tits up and you want t life back in - you can’t on a BTL mortgage. Or you want to sell the flat to buy a new property with your boyfriend in a few years. That’s why most mortgage companies do the permission to let thing, as it’s most pragmatic for most people.

I do think the issue might be in how the mortgages are being calculated - on a BTL yield basis or on a personal income-multiple basis. You should clarify that.

There’s loads of BTL mortgage comparison services if you Google - money supermarket etc. Stick your details in there and see what rates you are offered on a BTL basis.

Original poster

Paintedocean · 12/10/2022 10:41

NoSquirrels · 12/10/2022 10:32

Sorry, on the 35% LTV. You’re saying you have a great deal of equity (e.g. flat worth £100K, mortgage needed 35K)? Is that right? Which obviously wouldn’t be an issue at all.

Show quote history

Well I told the broker the rental yield and also answered all the questions they asked about my income / expenditure. I enquired about a BTL - it was the broker who said let to buy - and confirmed this was correct when I queried it

OP posts:

Original poster

Paintedocean · 12/10/2022 10:44

NoSquirrels · 12/10/2022 10:40

I live in and own a property; decide to move in with partner so rent property out with no need to buy another property.

It’s not that unusual a situation. But most people doing this just get permission to let from their existing residential mortgage lender. It’s usually granted for a time-limited period e.g. 3 years and adds a couple of per cent to the mortgage rate. That still usually works out cheaper than a new BTL mortgage. And it’s usually the pragmatic choice because what if your new relationship goes tits up and you want t life back in - you can’t on a BTL mortgage. Or you want to sell the flat to buy a new property with your boyfriend in a few years. That’s why most mortgage companies do the permission to let thing, as it’s most pragmatic for most people.

I do think the issue might be in how the mortgages are being calculated - on a BTL yield basis or on a personal income-multiple basis. You should clarify that.

There’s loads of BTL mortgage comparison services if you Google - money supermarket etc. Stick your details in there and see what rates you are offered on a BTL basis.

Thanks to everyone who is replying! Really appreciate it!

OP posts:

NoSquirrels · 12/10/2022 10:44

Well I told the broker the rental yield and also answered all the questions they asked about my income / expenditure. I enquired about a BTL - it was the broker who said let to buy - and confirmed this was correct when I queried it

Make a complaint then. Sounds like they applied for the wrong product and you would never have qualified for that rate.

EmmaH2022 · 12/10/2022 10:47

OP just to say that I think I had a similar problem

Brokers seem to expect us, the customers, to know what product we want and what the industry calls it

I tried to explain wanting a let to buy, when I was really was planning on doing let to buy, and was greeted by bafflement with a few brokers. London & country seemed to know their stuff. But generally no one did.

you are trying to convert a residential mortgage to a buy to let though, I think. But it's frustrating that we are now expected to know what the banks would have given advice on in the past.

ChiefWiggumsBoy · 12/10/2022 10:48

Let to Buy is when you're releasing funds from your residential property, which you will then let, to buy another. If you're not, then you're just either moving onto a Buy to Let rate or you are getting permission to let, which is normally a short term thing.

Your broker is wrong here, you should be moving onto a Buy to let rate.