I'm looking at a HMO for my next project but would like to put this one into a new limited company. How easy\difficult is to get a mortgage on a limited company without any trading history
What are the perils and pitfalls of using brand new limited companies for lending? Is it possible?
Mainstream BTL lenders do not lend to limited companies or SPVs regardless of how young or old they are. If you want a 'vanilla' BTL mortgage you have to apply as an individual.
If you want to borrow in the name of a limited company, then you will need to go to commercial lenders, or what I would refer to as specialist lenders; those on the periphery of BTL lending.
Trading history, accounts etc. are less relevant if the property you are putting up as security has a provable, consistent income that reassures the lender that you have the ability to service the mortgage payments. So, if you can show a fully let property, with ASTs as the proof of...
In various interviews and strategies there is a fairly heavy reliance on buying BMV and recycling your cash quickly to multiply your portfolio and increase cash flow. This doesn't only seem to be theory, but what lots of investors are actually doing.
How is this achieved? Are people buying with cash and then able to get a BTL mortgage as soon as they like?
I guess another option is that some are using bridging until they've done the work and then getting the mortgage at the new higher value?
What are the options for those who simply want to use standard BTL mortgages? Would there be many with no ERC? If you use these to remortgage after 6 months after adding value, will the banks start to get annoyed? If that's the case is really the only option to wait out the 2 years and remortgage then? It seems like that will slow things down quite dramatically.
Building a portfolio traditionally can be a very slow process. Buy a property, put 25% deposit down, wait...
I got an HMO which meets full HMO regulations. I'm thinking of making it into a B&B which will certainly generate more income.
I'm going to remortgage ASAP. How do I prove the income as a B&B? Do I need to wait for one year?
If you are looking to remortgage, commercial lenders will view an HMO and a B&B completely differently.
With an HMO you have ASTs or licences, this gives the lender comfort of a continuity of income with which to service the mortgage.
With short-term letting (B&B, hotel) you could be full one week, empty the next, so no continuity of income for a lender to assess your ability to service the mortgage.
This means historical occupancy rates are critical to a lender to analyse your ability to service the mortgage. As an absolute minimum, the lender will want several months proof of occupancy percentages, but more than likely will want at least one year plus.
Lenders also prefer relevant...
Any tips on getting the highest valuation for a property you want to mortgage?
It helps to know that any surveyor's mindset when asked to value a property purchased a few months previously will be to value it at the purchase price paid, unless given compelling reasons not to.
When they arrive at the property they will be focused on the purchase price paid; your success in getting the highest valuation will be determined by how much you are able to shift their focus. Here is what I teach on my workshop on this subject.
What the difference is between a commercial loan and a regular BTL mortgage is and what are the pros and cons?
BTL mortgages are usually where you start, commercial mortgages are usually where you end up. If you are just starting BTL lenders are your natural choice. Generically, the differences are as below.
BTL lenders have many tick box criteria, commercial have many less.
BTL lenders ideal borrower is:
Their ideal property is a single let, max 5 bedrooms. They are happy to lend to first time landlords, but almost none lend to first time borrowers.
Commercial lenders are happy to lend to full-time landlords, but not exclusively so.
I've purchased a property (exchanged contracts already) that is currently let to a charity.
The charity, as I understand it, then put young adults who have recently come out of care into the property (either on a sublet or license I'm not sure at this stage). It’s on a corporate tenancy agreement (i.e. just a common law tenancy not an AST).
Are there any lenders that allow this? Most want ASTs and the ones that I can find that allow corporate lets seem only to allow the company to then place one of their own employees in the property.
I did want to purchase this with a mortgage, but looks like I will have to use cash. I can give the charity notice a couple of months after completion so that I can get a buy-to-let mortgage, but it seems a shame to get rid of a tenant that is likely to be there for a long time so I could do with finding a mortgage lender that will allow all of the above.
There’s no need to get rid of a good tenant,...
I own two properties outright – both have tenants and yield 9.5% of their £85K (each) value. I've owned them for four months they have been let for two months. I have no proof of income as I've just started doing this full time. Can I BTL remortgage these at a competitive rate anywhere, or do I need to wait six months and go through TMW?
The wider issue here is that you can buy properties for cash, with all the advantages that brings, but you don’t want to then wait six months plus before you can repeat the process. If the mortgage lenders that give you the best rates require that you own the properties for six months before you can apply for a mortgage, you are missing out on potentially lucrative deals because your cash is trapped in these properties.
You have a defined chunk of cash and it is big enough to buy properties outright, as you have bought two worth £85k each (I’m not sure if you paid £85k or if, now you have...
I am looking to buy a house to multi-let, but the house I've identified comes with an elderly long-term tenant on a long term contract. Can I serve notice for the tenant to leave or does a long term tenancy come with regulations to stop me doing this?
This sounds like a pre-1988 Regulated Tenancy. If it is, that is a lifetime tenancy, with possibly the right to pass the same agreement down to the next of kin.
You have zero chance of serving notice and any court will back the tenant 100% if you do.
Tenants like this, or those around them, have a highly developed awareness of the value of their tenancy. One such tenant in a central London flat was reported to have refused £500,000 in cash to give up the tenancy.
You have zero chance of borrowing any money to purchase it either, as no lender will touch it with a bargepole due to the tenant and their rights of occupancy.
This type of property has long been the preserve of affluent cash buyers. These properties...
I have seen a great property I want to buy but I cannot decide if I should buy it for cash then refinance it once it is refurbed, or borrow to purchase it. I have the cash to buy outright, but I am worried that, by tying up all my cash in a property I will not be able to buy another property during the period I am waiting to remortgage it, if I found a really good one.
If you can fund a deal with cash, you should; that way you have zero borrowing costs.
Investors are often reluctant to do this on the basis that tying up their cash in one deal takes them out of the game if and when other juicy deals come along whilst they are waiting to remortgage to release their cash.
This is impaired thinking. I teach that, whilst you are in that limbo period, you can buy your next deal without any hard cash at all -- by intelligently using bridging finance, like this
I own outright two properties, which are rented out; both are worth £85K and both yield 9.5%. I've owned them for four months they have been let for two months. I have no proof of income as I've just started doing this full time. Can I get a BTL mortgage for these properties at a competitive rate anywhere, or do I need to wait six months and go through TMW?
The wider issue here is that you can buy properties for cash, with all the advantages that brings, but you don’t want to then wait six months plus before you can repeat the process. If mortgage lenders (the ones that give you the best rates) require you to own the properties for six months before you can apply for a mortgage, you are missing out on potentially lucrative deals because your cash is trapped in these properties.
As you have bought two properties worth £85K each you already know that being a cash buyer allows you to close deals fast, to negotiate harder, to buy unmortgageable...