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Original poster

I am clearly too stupid to understand mortgages

16 replies

LaurieFairyCake · 14/09/2020 17:27

My current lender is confusing me

In a phone call this morning she said I would want a residential mortgage and then she went to talk to a colleague

She then called me back and said they could only offer me a buy to let but they wouldn't take rental income into account - so she had me agree that I would have a buy to let and not knock through until I'd paid off the mortgage

Does anyone know why they won't take rental income into consideration Confused

I have a mortgage with them. I wanted to buy next door and knock through and have one place.

OP posts:
Cocomarine · 14/09/2020 17:59

Why are you talking about rental income when it’s not your intention to rent?

It sounds like what you want is a second residential mortgage, because you’re not buying to let. Second residential mortgages are possible but not that common, and you have to show the lender why you want one. They don’t take rental income into account from that property, because that’s unapproved letting - residential mortgages are cheaper that BTLs, so they have to stop people lying about needing a second residential when they’re really letting the second property out. So that makes sense that they won’t take into account rental income.

But - doesn’t fit with them suggesting a BTL.

Tbh, this is where a broker is ideal. You need a lender who is amenable to this kind of project - and that’s where a broker can really know their stuff.

m00rfarm · 14/09/2020 18:02

You may need to show planning approval before they can join together. You cannot live in two houses so one they are saying is a buy to let. and until the local authority or whoever deals with planning makes it a single house, then you’ll need two separate mortgages. Can you raise the money from your existing property?

Cocomarine · 14/09/2020 18:02

Just to add: a lender would surely be very wary about this? Your final larger house might not be worth as much as the sum of the 2 previous properties, impacting the equity and value against which they’d agreed to lend.

Cocomarine · 14/09/2020 18:14

Sorry, thinking aloud... the bit about not knocking through until the BTL mortgage was paid off makes sense. If you have 2 mortgages on the properties, and you knock them through, and you default on one mortgage - how are they ever going to get a repossession on house that no longer exists?!

I think that’s why she was suggesting the mortgage had to be paid off first.

This is pretty specialist stuff, because you’re impacting both of the houses on which you have mortgages. If you were just speaking to someone who picked up the phone on an enquiry line, I doubt they’d be able to correctly advise on something that’s so niche!

movingonup20 · 14/09/2020 18:19

Use a broker! L&c have been good

Original poster
LaurieFairyCake · 14/09/2020 19:34

Ok to answer some questions

Yes, I did want a second residential mortgage but can't - possibly for the reasons you've stated

The size of the two properties is 2250 square feet for a 600k mortgage - the house in my street is smaller but a million quid

My 'house' is a 3 storey leasehold flat - next door a 2 storey freehold flat (basically the top 2 of my house)

OP posts:
Original poster
LaurieFairyCake · 14/09/2020 19:37

The broker thing is a problem because the one we used to get current mortgage had a real problem as she couldn't find lenders for ours as it's a bit niche (above retail) so our current lender was the only one Confused

I'm going to end up in the position of easily being able to find a lender to lend for the smaller full house in the street (where I don't want to live as it needs everything doing) but not being able to buy the flat next door which is only 300k Confused

OP posts:
Original poster
LaurieFairyCake · 14/09/2020 19:39

To be clear about a question I'm asking Grin

If I have a buy to let mortgage on a flat I'm GOING TO LET do they not take rental income into account when looking at affordability ?

OP posts:
Original poster
LaurieFairyCake · 14/09/2020 19:53

By the way I'm really glad you're all saying it's niche what I'm asking for as I've bought and sold about 15 times and I thought my mental capacity was just declining when I didn't understand what she was saying Grin

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MrsMoose0 · 14/09/2020 20:10

No, they won't consider rental income when it comes to affordability as you need to be able to afford the mortgage even when the property is empty and you're not receiving any income from it.

PonDeReplay · 14/09/2020 20:17

Could you remortgage your current home to release enough equity to buy the new place? Seems simpler to just have one lender if possible.

Original poster
LaurieFairyCake · 14/09/2020 21:27

It is just the one lender but there's about £300k equity (that would mean that we would have 550k mortgage on our property worth exactly 550k)

OP posts:
Original poster
LaurieFairyCake · 14/09/2020 21:30

MrsMoose

You're right but there doesn't seem to be a grey area there at all - it's London so they're assuming it would be empty ALL the time rather than some of the time Confused

Why is there no nuance - if they said ok, you have to cover the mortgage on
average half the time, you can clearly do that - then it would make sense

To say you now own an empty property - you have a £1200 a month mortgage to pay (can easily do that) and we assume it will sit there empty is just bizarre to me

OP posts:
MrsMoose0 · 14/09/2020 22:04

I get what you're saying but they're covering themselves (and you) for the worse case scenario. Any number of things can happen to a property that might make it uninhabitable for a length of time. It might be unlikely but it is possible.

Pipandmum · 14/09/2020 22:12

I got a buy to let mortgage last year and rental income was the ONLY thing they looked at - it had to be 125% of the mortgage payment. But I had a signed tenancy agreement in place as I was buying an occupied flat, maybe that makes a difference.

Teenytinyvoice · 14/09/2020 22:13

We got a second residential mortgage, from a high street bank. The property was for a relative to live in, so not a B2L, but we weren’t going to live in it either. Confused everyone all round at first.

They are shoring up the lending criteria for B2L considerably at the moment. It’s almost like they are expecting a massive financial downturn...

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