BTL Remortgaging Is A Pain In The Ass (But Still Worth Doing)

Happy New Year everyone! How was yours? I hope you all made it through the other side in one-piece, albeit double in size, still bloody-eyed and intoxicated.

Alas, the party’s over, it’s now back to bizz…

There are certain topics I absolutely despise blogging about, yet I reluctantly do it. I do it because many of you are less tolerable to my brand of humour and the general way I express myself, and consequently feel utterly repelled when I, too frequently, blog about issues I actually do enjoy writing about, which typically involves me calling my tenants gutter-rat assholes over issues that are allegedly trivial, like when they punch huge gaping holes through the walls with the wrong tools/nails to hang photo frames. I still maintain it’s not trivial, and it’s clearly the act of a bonafide fool, despite many of the disgruntled comments telling me otherwise. In any case, there’s very little to learn from me in those posts, besides from several variations of how to call your tenant a stupid inconsiderate dip-shit.

I personally find the entire venting process therapeutic. But of course, and totally understandably, the post results in offending folks, and it becomes one big episode of Eastenders. However, through trial and error I’ve discovered that if I sandwich my toxic and intolerable posts in-between less offensive ‘learning material’, it appeases those that generally disdain my tone, because it gives them just enough incentive to stick around for the free content and/or revel in my misery. It’s a real balancing act, believe me.

BTW, are you one of those delicate snowflakes that forcefully endures my crap? If so, leave a comment, say Hi. Let’s make love.

Mortgages are one of those dry topics I have absolutely no pleasure in blogging about, because, well, it’s mortgages. Enough said, right?

However, while mortgages are the arm-pit of blogging subjects, it can also be one of the few determining factors of success or failure in this business. A good/bad Mortgage can be the ‘make’ or ‘break’ entity in the landlord cycle. So, the more informed you are on the matter, the more successful (and rich) you’re likely to be. Basically, despite how horrendously unappealing it is, I cannot avoid talking about the subject because it’s so unbelievably pivotal to being a landlord/property investor. It’s all very unfortunate.

Interest rates & remortgaging at the right time

Will the UK interest rate rise, fall or continue to stay firm at 0.5% as it approaches the 7 year low, in the foreseeable future?

There’s been continuous speculation of a rate rise for years and years now, but much like the circulation problems us men will all eventually face… it just won’t rise! The problem with the speculation is that it puts us mortgage holders (particularly those currently on or soon-to-be facing, a displeasing variable rate) in an awkward position, because it makes our decision of whether to stay put or get tied into a fixed rate… a little bloody difficult. I know many borrowers have locked into fixed rates based on the speculation of a rise, and I’m sure many regret doing it too early.

That said, timing is everything, and the wrong decision can be an extremely expensive mistake. No pressure. But seriously, don’t make a shit decision because you’ll end up paying through the nose, and just about every other orifice. The amount of landlords that have toppled due to poor mortgage choices is very real and excruciatingly scary.

I don’t know if I made the right decision at the right time, but I’m convinced, perhaps hopelessly optimistically, that I made a good decision last month when I locked my mortgage into a 5 year fixed rate policy. Yeah, I did it.

It’s actually the first time I’ve remortgaged a BTL policy in years and years, because as many of you will know, up until last year the products on the market have been utterly dog-shit; saturated by ‘deals’ that look OK at a glance, but eye-wateringly painful once the ‘admin fees’ are taken into consideration.

The fees literally made remortgaging pointless/unbearable, it was an absolute joke. So-much-so that I begrudgingly remained on a pretty unattractive variable rate for much longer than I would have ideally liked to have been, but that was better than the alternative. It made more sense to remain on a 4.79% rate rather than moving onto a product that was ‘masquerading’ as a good deal with a 2.9% rate, because most of those products came attached with a 2% product fee (or a rate equally as ridiculous). It was like undressing an unbelievably attractive lady only to unexpectedly find a huge, pulsating erection in-between his/her legs. Hello summer break 2010, Thailand. What a terrible state of affairs.

I’m sure many of you were, or still are, in a similar situation and are equally as frustrated by it. About the product fees, too. Yes, I’m hilaarious.

Why remortgaging was a pain in the ass

Bouncing from one lender to another was a massacre.

I’ve already briefly touched on the pains of remortgaging in today’s climate in a previous blog post, where I mentally-ejaculated over the paperwork required to complete the mortgage application process. At that point, the mortgage hadn’t even been officially approved, but I was already feeling drained and lifeless by the bureaucracy of it all. However, I said I may revisit the remortgaging experience/outcome in more detail if, and I quote, “I’ve lost the will to live, and have nothing better to do

So here I am. I’m officially in the suicidal stage, which naturally rears its ugly head towards the end of the Christmas/New Years period. I’m almost willing to do anything to derail my mind from being consumed with the inevitable thoughts of returning back to reality/work, and that includes talking about shitty mortgages/remortgages. If you’re also relatively normal/average, you’ll be feeling the same- consumed with dark and morbid thoughts, perhaps fantasising about your slave-driving superior choking to death on a brussels-sprout during the holidays.

Anyways, less fantasising, and back to why BTL remortgaging is now a pain…

I swear BTL remortgaging never used to be this difficult (I’m speaking comparatively here, so don’t jump down my throat for being a prissy little drama-queen, even though I probably am one). The extended and drawn-out paperwork only accounted for a small part of what made the process a pain; the prerequisites of an applicant has become significantly more demanding than it used to be, that’s for sure.

Don’t get me wrong, I get it. After the snake-oil bankers burned the UK economy to the ground during the first decade of the new millennium by throwing money at practically every Tom, Dick and Harry that applied for a loan, something had to be done- the lending criteria needed to be strengthened. But, fuck-me-sideways, from my most recent experience, it proved to be a challenge for someone even as qualified as myself, who comes attached with a perfect credit rating, an adequate loan to salary ratio, a penis the size of a party sausage, and a several year history of timely mortgage payments. Alas, my lender simply wasn’t interested in 99% of the perks I bought to the table.

If you’re one of those people that hasn’t had the pleasure of remortgaging recently but plan to, expect the following (at least from Natwest, other lenders may work slightly differently)…

  • Lengthy application process
    Completing the mortgage application, face-to-face with my broker, took the best part of 3-4 hours (bear in mind this was just completing the application form). It never used to take that long. It wasn’t a comfortable experience, to say the least.

    If you’re anywhere near as frigidity and restless as I am, it will be hopelessly agonising. I lost count of how many times I lost the will to live and my ass became unpleasantly numb.

    There was a lot more reading and processing involved (i.e. paperwork) than any other time I had remortgaged. I think that’s primarily because of the strengthened screening process, and because of the whole PPI scandal, so now brokers have to walk us through every clause, or at least watch us ‘pretending’ to.

    The paperwork has raised its game in stupidity and almost doubled in quantity. I don’t even know what I signed or why. But you shouldn’t do that, you should read everything properly :)

  • Rental income no longer basis of loan
    It was so freaking easy when I applied for my first few BTL mortgages back in the day; lenders didn’t even care about my salary, it wasn’t even taken into consideration. The entire loan was based on the rental income of the property. Unfortunately, that ship has sailed, they couldn’t give two shits about rental income anymore.

    The eligibility of a BTL mortgage is similar to that of a residential mortgage now; it’s almost entirely based on two years’ worth of net income and the value of the property. That instantly makes the process horrendously more difficult.

    That change immediately caused problems for my specific circumstances because I had recently changed my employment/company status (e.g. from sole-trader to Limited), which meant I didn’t have two years’ worth of records under the same ‘entity’ – for some reason that caused all kinds of bullshit problems. I’ll spare you from the details.

    Granted, this new lending policy actually makes sense to me, but it’s a massive change, which has added a barrage of new obstacles.

  • Rental income cannot contribute towards net income (even if it is your salary)
    This blew my mind. This actually didn’t make any sense at all.

    Natwest’s BTL products are currently only available to those with a minimum net income of £25k.

    A significant portion of my rental income accounts for my ‘annual net income’, but my lender (Natwest) doesn’t take rental income into consideration, not in any shape or form, it’s completely excluded from their calculations. What the fuckitity fuck? I’m told many lenders follow the same guidelines these days.

    Fortunately, my grubby little fingers are wedged deeply into a few other pies which contribute towards my net income, enough to pull me through.

    I didn’t ask, perhaps I should have, but how do full-time landlords actually qualify? Can they even qualify? Baffling and worrying.

  • Bank Statement Analysis
    This was a little weird and alarming. I’m not sure if this was normal practice or if I was bent over and my human rights were violated.

    My broker said the underwriters’ needed an analysis of my monthly expenses. This involved my broker going through every transaction for 3 months’ worth of my bank statements and noting down the ‘type’ of transaction for each one e.g. income/salary, utility bill, grocery bill etc.

    I guess it’s one way of assessing whether I live with in my means, and a good way of stress-testing my finances. But still, it seemed a bit too invasive, but they had me by the balls, and my hands were tied. I reluctantly played nice while my broker quickly became aware of just how many fetish based porn websites I’m paying a premium membership for. He felt embarrassed, but didn’t shy away from asking for recommendations.

    Be warned, any embarrassing purchases may make for an extra unpleasant experience.

  • 60% loan-to-value
    This wasn’t so much of an issue for me because I invested years ago and luckily benefited from sky-rocketing property prices. I also avoided putting down flimsy deposits. Bear in mind, the less equity you have in a property, the more vulnerable you are to economic fluctuations e.g. interest rates.

    In any case, while you used to be able to access good deals with as little as 10-15% equity/deposits, that’s definitely no longer the case. From what I noticed, the best products available in today’s market requires a 60% loan-to-value ratio.

    In reality, most landlords don’t have a pot to piss in, let alone the luxury of 40% equity crammed into their investments, so that instantly makes the majority of us unqualified to even apply for the best products, let alone apply with hope and then get rejected.

    Depending on your situation, it may even be worth clearing some debt to qualify for the better deals. Perhaps a smart option to consider.

  • Mortgage payment history means nothing
    This point isn’t really a change in policy, because it wasn’t relevant back in the day even when BTL mortgages were more forgiving. This is more of a moan/gripe of mine.

    There were times when I thought I wasn’t going to be a successful applicant, especially when it came to light that my change in employment status could cause complications. I think I allowed my broker to get into my head, because he kept muttering shit to me, reinforcing how I needed to convince the underwriters’ that I won’t be a catastrophic liability. He made them sound unreasonable.

    During my panic, I unleashed a list of my “good qualities”, hoping it would sway the decision in my favour. I told my broker I haven’t missed a single mortgage payment for multiple mortgages in several years, hoping he’d scribble down a note in the “extra comments” box in my application form (i.e. “this guy is a proven reliable payer. Handsome, too.”) and that it would count for something!

    Yeah… well, NO! He basically told me that the underwriters don’t give a damn about any of that. Apparently mortgages aren’t like Credit Card applications, where credit history is everything. Who knew?

    You’d think a proven track record of consistent mortgage payments would carry some punch. Wishful thinking, apparently.

I guess what I’m trying to say is… remortgaging a BTL ain’t no joke anymore. It’s tough out there.

Why I fixed for 5 years and why now!

Does anyone actually care? Probably not. I’ll divulge anyways…

In the current climate, assuming it makes sense to remortgage, I believe fixing for 5 years is the best option (or at least it was back in Nov/Dec 2015 when I remortgaged). Of course it may differ for each individual case, but generally speaking I think it’s the sensible move right now…

  • Interest rates can’t get much lower
    The UK base rate is currently halt at 0.5%, and it’s extremely unlikely to sink any lower unless the economy fumbles into meltdown.

    My gut instinct tells me that once the rate starts to rise (which it inevitably will), it will continue gaining momentum in one direction. I think it will happen in the next year or so. On that basis, being on a variable rate is a scary prospect, especially if you’re already on a rate that’s difficult to digest. I even believe fixing for 2 years is a little risky right now, despite there currently being VERY handsome 2 year products available, because by the time 2018/19 swings around, I suspect interest rates would have increased enough to cause concern when thrown onto the SVR.

    It’s probably worth mentioning that in December 2015, the US central bank ended a seven year hold on interest rates with a 0.25% increase. It’s a tiny shift, but many speculate (again with the whimsy speculation) that the increase on the other side of the pond may influence our base rate. Either way, even if the base rate lowers, it can’t possibly be by much.

  • Reasonable 5 year products available
    There are (or at least were) some comparatively sweet deals available at the time I bit the bullet. Incidentally, rates have slightly increased across the board over the last few months, so evidently I pounced at a good time. Having just looked over Natwest’s current products, I can see the mortgage policy I obtained has been dragged off the shelf and replaced with a higher-rate product (increased by 0.2%). But there are still good deals around.

    I was actually eyeing up the market for a few years before committing. I have vivid memories of experiencing anxiety attacks in the form of breathing difficulties and erectile dysfunction because I was scared by the speculating chatter of increasing rates back in 2013. But as said, due to the insane product fees, I decided to gamble on sitting tight. I patiently waited for a deal that grabbed my attention to come along.

  • My previous rate was a little scary/unstable
    Before remortgaging I was on a 4.79% rate, which was my lender’s SVR. That’s not an absolutely terrible rate, but it’s not great either. But it could easily become unbearable. If/when the rates do start to climb again, you can bet your bottom dollar on the fact that most lenders will quickly readjust their SVR accordingly.

    It’s not totally unreasonable to assume that the base rate will climb by a couple of percent in the next few years, at which point I’d probably be on a 6-7% rate! OUCH! That prospect was worrying me for a few years.

    So, since I do believe rates will climb in the next year or so and there are reasonable 5 year deals available, it made sense for me to make the move.

  • I like planning ahead
    I’ve already made it clear in a previous blog post that I’m a first-class pussy when it comes to risk. I like risk to be minimised in most aspects of life. I’m a low-risk landlord.

    Fixing for 5 years is a comparatively safe option because it means I know exactly how much I’ll be paying for the next 5 years. That’s a pretty satisfying feeling for a massive pussy like myself.

Old Vs New Mortgage (and the savings I’ve made)

Here’s an overview using approximate figures of my old and new policy, highlighting the positive impact remortgaging has had for me…

Old policy
Lender: Initially Northern Rock, but then taken over by Virgin
Outstanding balance at time of remortgage: £90,000
Loan period remaining at time of remortgage: 16 years, 5 months
Rate: 4.79% (SVR)
Type: Repayment
Minimum monthly payment: £680
Total I’ll repay over full term (based on current rate): £130,500

New policy
Lender: Natwest
Loan amount: £90,000
Loan period: Reduced to 16 years
Product Fee: £0
Rate: 3.79% (5 Year Fixed)
LTV: 60%
Type: Repayment
Minimum monthly payment: £633
Total I’ll repay over full term (based on current rate): £121,500

Broker Fee: £0 (I went directly through Natwest, didn’t use any third party)
Legal Fees: £0 (Natwest took care of all the legalities)
Survey Fee: £0
Application Fee: £20

I just want to clarify, my experience with Natwest was very positive overall. I can’t fault my broker, he was extremely gentle and loving with me. He was clearly doing everything in his powers to make my application a successful one, and I couldn’t ask for more. However, the general process of remortgaging has a lot to be desired. It was Hell on earth.

Almost 3 months is how long the process took, but I’ve probably aged by 20years during that time.

I’m now a proud owner of a spanking new mortgage, which weighs 1% less. That means I’ll be making a 10k saving over the duration of the loan (I’m basing my calculations on a static rate of 3.79%, even though it won’t be) and paying £50 less each month. I would say I can’t complain, but that’s all I’ve really done.

If the time and effort I put into remortgaging is condensed into a single unit, I’d estimate that I invested 5-6 hours to achieve the 10k saving. Plus, a little added emotional stress, which left me scared, unsociable, often intoxicated, and generally insufferable.

While the figures alone show why remortgaging can equate to extra profit with relatively very little work, it doesn’t compare to how much value I put on the luxury of knowing exactly how much I’ll be paying for the next 5 years without having to worry about any economic fluctuations. I just don’t trust the economy right now, there are just too many volatile external factors.

Yes, BTL remortgaging isn’t as easy as it once was, and it probably never will be again. Yes, a lot of the bureaucratic paperwork is total garbage, and the entire process can feel suicidal, especially if you’re dealing with cowboy Solicitors (who often cruise along at snail-pace, which is very annoying) and/or unforeseen complications, but it can be entirely worth it.

What’s my unqualified advice? If you’ve got any type of mortgage, you should look into the possibility of remortgaging at every available opportunity, because you could end up saving a buttload. You may even find a worthwhile deal with your current lender which you can switch over to, at which point the entire process should be infinitely easier.

Well, that’s my thoughts/experiences summed up for my most recent adventure. I guess most you can already imagine where I’ll be investing that extra £50 I’ve started to bank each month. ON YOUR MUM.

God, that was a terrible joke on every level. I feel 16yrs old again. I didn’t mean it. I’m sorry.

What are your thoughts? Have you got any mortgage related experience(s) to share? Have you recently remortgaged? Are you thinking about it? Have you been inspired to look into the prospect of remortgaging? Did my mum joke offend you?

If anyone actually does take action in light of my experience, please let me know the outcome! I do love a happy/wet ending!

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65 Comments- Join The Conversation...

Showing 15 - 65 comments (out of 65)
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Richard 7th January, 2016 @ 10:34

@Louise

I suggest you find another broker who has better knowledge of BTL mortgages. It will make your life a lot easier. Lenders have different rules on who they will consider etc, but assuming you pass affordability criteria there will be a lender who will lend to you without a primary residence. (a work college has just done so)

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Richard 7th January, 2016 @ 10:44

Libbi, the main reason why you would re-mortgage is if you want to invests the money realised in to something that produce a higher return (often another BTL) or your want to easy access to the cash. You can achieve much higher returns (net income/capital invested) by mortgaging. If you are just going to stick the money in savings account for a long period then mortgaging is less attractive.

Richard

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K.. 7th January, 2016 @ 11:07

@Libbi
You will pay more tax under the legislation coming in from 2017 if you mortgage the property. Limited companies and those owning outright are the only ones who will escape this tax.

Seek advice and/or do the calculations first to see if you will be worse off.
What you are proposing was logical and the best way to expand your btl empire BEFORE the government changed the rules. Now mortgage interest on btl will effectively be taxed.

Google clause 24 and finance bill and landlords to find out more.

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Martin 7th January, 2016 @ 11:09

@Stella
I bought a house to live in several years ago & when circumstances changed I decided to rent it out. I was a little slow in advising the lender & in the meantime my delightful tenants failed to forward the mail and to cut a long story short, I ended up with a CCJ...This meant I was stuck with my existing lender who offered me a BTL product which would have tripled the monthly repayments of my interest only mortgage. I considered this somewhat unhelpful so did nothing & four years later, I'm still paying the same amount and have had no issue with the lender. I could be wrong but presumably, so long as the mortgage is being paid, there is little the lender can do to force you to change product. Most mortgages revert to the standard variable rate at the end of the deal term which certainly in my case, was better than remortgaging or switching product.

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The Landlord Avatar
The Landlord 7th January, 2016 @ 11:37

Great comments/feedback, and that's why I love you guys!

@Ryan
Hah, I remember the times when I used to hammer my credit card to fund renovations. Good time to get a cashback credit cards too!

Solicitors are notorious for being slow. I've been there, so feel your pain.

@Robert
No probs :)

Good luck with the remortgage, let me know how it goes when the time comes. Generally, if you have a reasonable income and have enough equity, you should be fine.

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The Landlord Avatar
The Landlord 7th January, 2016 @ 11:38

@Richard
Ahh good point. I didn't initially state that the process should be a lot easier if sticking with the same lender. I've quickly added that as a quick note. Thanks for reminding me.

I also have a mortgage with BM, but it's currently below 1% - I benefited from when the base rate dropped by 5% back in 2008-2009!

When I was looking at mortgages back in Nov 2015, I noticed a lot of 5yr trackers hanging around the 3% area. So assuming the base rate does only increase by 1% in the next 5 years, I still don't think it's worth the gamble- I'd rather pay a little higher now.

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The Landlord Avatar
The Landlord 7th January, 2016 @ 11:42

@Louise
I know some BTL lenders require you have to be a residential as a requirement! However, many don't, so I wouldn't waste time worrying about that. Natwest didn't, they only required a minimum of 25k salary.

As others have said, it's well worth talking to a broker that's experienced with BTL mortgages. They can potentially save you thousands.

I personally think it's a lot more difficult to be a 'profitable' landlord now than it used to be. Before you could buy any old property and do relatively well thanks to a booming market, a lower barrier to entry and easy access to credit. Now a lot more time and effort is required to actually buy the right property and pass all the obstacles. However, having said that, I still think it's one of the best methods of securing a future/pension when done properly.

Yes, due to the stamp duty nonsense time is definitely of the essence. I read an article yesterday (I forgot where), that said landlords have until the end of the month if they want a good chance of escaping the extra stamp duty fees.

Good luck Louise, please keep us updated!

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The Landlord Avatar
The Landlord 7th January, 2016 @ 11:46

@Ian
Zero to £1500 because of a valuation discrepancy! That's ridiculous. I'm assuming it didn't make sense to progress on that basis.

Did you end up getting a different mortgage? If so, what deal did you get, if you don't mind me asking?

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The Landlord Avatar
The Landlord 7th January, 2016 @ 11:53

@K..
Thanks, K! Appreciate it.

Forgive my ignorance, but why would there be less paperwork going through an independent broker? Won't the actual lender require the paperwork anyways? Or does it work differently?

After being raped of my bank statements, I did Google around, and apparently it's common practice these days.

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The Landlord Avatar
The Landlord 7th January, 2016 @ 11:58

@Libbi
Thanks Libbi!

Haha, you must have a sense of humour equivalent to a 14yr old, as I do!

If I were in your shoes and wanted to expand my portfolio, I would probably release about 30-35% equity and buy another property. I'd make sure the equity released covers 30%+ (the more the better) deposit for my next purchase though. That should be relatively safe, in my opinion.

In these uncertain times I feel it's crucial to have equity. I wouldn't actively stretch myself right now.

Others may disagree, particularly those that aren't as adverse to risk.

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Ali 7th January, 2016 @ 12:09

What about the new restriction on tax relief coming in over next few years? I've been trying to move properties to a Ltd company to minimise this and one of the biggest issues is the penalties on redeeming some of my 5 year fixed mortgages. Did you take this into account as if you find you have to move it will likely be expensive to break those 5 year deals. The change can mean you may end up paying tax on a profit that does not even exist as interest won't be deducted fully as an expense!

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Libbi 7th January, 2016 @ 12:36

@Richard
@K..
@The Landord

Thank you all for your advice, it is much appreciated and has helped crystalise my thoughts. I am off to investigate BTL mortgages to release sub 40% of the equity in the property I own to fund a second BTL purchase.

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Jacksonovich 7th January, 2016 @ 13:09

Great Blog, My Mum's single so can i take you up on your £50 offer ?

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Mrs M 7th January, 2016 @ 13:39

'Rental income cannot contribute towards net income (even if it is your salary)'

Pity the taxman isn't working to these rules - I'm already dreading 31st January!At least it's February the next day and my dryathlon is finished.

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Mrs M 7th January, 2016 @ 13:41

@ Libbi

Take the money and run girl. Don't even think about another set of tenants....

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Kevin 7th January, 2016 @ 14:03

I went through this same ordeal back in September last year with Natwest when I wanted to release some of the equity from my property. It was like pulling teeth and far above what I have ever seen before. I thought you only get the "advised service" 3 hour initial meeting if it is a residential mortgage or are they now doing this for BTL also !?!

I think Natwest will accept rental income if you can prove 2 years for the property you are re-mortgaging via tax returns, etc?

I guess my question is was this a residential or a BTL mortgage, if a BTL mortgage I will certainly be looking elsewhere on renewals!

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Chris Smith 7th January, 2016 @ 14:29

@ The Landlord. I am going through the same process with NatWest and have had exactly the same experience . Hopefully I will get to the end of the process soon after four month of madness. I'll update you if and when the re-mortgage happens.

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K.. 7th January, 2016 @ 15:41

Hi All
@TheLandlord
By less paperwork I mean that as recently as April 2015 I remortgaged via a free broker. I only had to supply wage slips and confirm the info on my enquiry form was still correct. That's it. No other paperwork and I have bought 7 BTL properties now. It has never been more complicated than that. (She touches wood...)
A good tip is to keep the mortgage enquiry / application form safe. It should have all your properties, mortgage account no's and info so it's easy to grab next time a lender or broker asks the same questions. A broker once told me consistency is important too, so keep your form or ask the bank for a copy as you went direct this time and roll thus document out whenever needed (assuming no major changes, it can then be updated in minutes and you avoid discrepancies from memory lapses etc.)

@Ali
I'm becoming very suspicious of the government. Freak landlords out and send them off to form Ltd companies at their own expense, then mess with Ltd co structures too. Screwed both ways :(
Dividend taxes increase from April 2016. Nowhere truly safe to run...

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Katie 7th January, 2016 @ 16:06

The fetish websites and asking for recommendations joke is brilliant :)

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The Landlord 7th January, 2016 @ 16:51

Folks, interestingly, while I was driving home, I heard on the radio that during George Osborne's speech this afternoon, he said we should be prepared for interest rate rises. Here's a news link on the daily mail website... of course, could just be more garbage...

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The Landlord Avatar
The Landlord 7th January, 2016 @ 16:54

@Mrs M
lol @ "Take the money and run girl. Don't even think about another set of tenants..."

I'm actually torn, because I totally get what you're saying. I've felt like that many times.

@Kevin
Natwest wouldn't accept rental income under any circumstance, it didn't matter what I showed them. My broker was clear about that.

As said in the main post, the BTL mortgaging application process has become very similar to residential mortgages. Thus, painful!

I had to wait 2 weeks for an appointment alone, because the broker can only see 2 applicants per day because the applications take so long now.

BTL mortgage :)

@Chris
I took approximately 3 months for the transaction to complete. There was a lot of waiting around time. I also had to wait for HRMC to send me a couple of documents (SA302) that Natwest requested.

Please do keep me updated, appreciate it!

Good luck!!

@K..
Nice tip!

I'm surprised you only needed wage slips. I clearly got absolutely raped!

@Katie
Joke? :)

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The Landlord 7th January, 2016 @ 17:04

@Ali
I'm not going to lie, I'm not really thinking about the tax relief changes right now. Perhaps that's naive/careless of me.

My aim is literally to reduce as much mortgage debt as possible over the next few years, and subsequently be set free!

I'm also in a fortunate position where I have high yields and high equity in my properties, so I can absorb quite a bit of turbulence by the Government (albeit, daylight robbery turbulence).

When the time comes I'll sit down with my accountant and see what the best move is based on my current situation. But hopefully by the time it all kicks in (2020), I won't be paying much interest.

Also, with the launch of a legal challenge against George Osborne's tax relief changes, anything could happen (am I being hopelessly optimistic again? Probably)...

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Clem 7th January, 2016 @ 17:37

Many thanks for your comments and jokes which definitely lighten the contents of your reading. My BTL 2 year fixed interest only mortgage (with NatWest) ends in July and therefore have to think of what to do. Two years ago I struggled to find anyone who were willing to do a 5 year fixed mortgage which is why I chose the 2 year option for the second time (including the £2k fee once again).

As I am very much a low risk kind of guy and absolutely despise mortgage lenders profit margins, I was thinking of paying a lump sum off in order to also further reduce my risk until I read your recent article regarding 5 year options without having to pay a fee (albeit a minimal £20 non-refundable one). However unless I have totally mis-read current updates on BTL mortgages, do we not also still need to consider the issue regarding the amount of interest we can no longer offset from April 2016 (i.e. now only 20% permitted)?

Your thoughts on the above would be gratefully appreciated.

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K... 7th January, 2016 @ 17:52

@Clem
Yes, you do need to consider the tax changes coming.

Do you know how much your mortgage interest is going to start costing you in future?
Can you afford this extra amount? If not:
Do you need to sell any of your properties?
Are you going to go limited?
Have you got cash to pay down any of your mortgages to reduce the interest and therefore the tax owed?

I have got hold of as many calculators as possible to find out how much extra tax I will need to pay and whether I need to sell up, just remortgage or commit suicide! Only a careful analysis of your portfolio will reveal the answer. Try going to Upad's website and searching for their budget change calculator, it's the best one I've found so far.
Bear in mind if you remortgage for 5 years, it'll cost you if you need to redeem the mortgage early, so you should be fairly sure you don't want (or need) to sell up in the next 5 years.

Hope this helps!

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The Landlord 7th January, 2016 @ 18:02

@Clem
I agree with what K said. I also briefly mentioned my position on the tax change in a previous comment (#36).

I've just looked up the calculator K was referring to, you can find it here!

Very useful, thanks K!

The change to my tax bill is actually quite manageable, although it's still completely ridiculous/unfair. We still have a few years before it fully kicks in, so there's still time for us to prepare and plan carefully.

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Ian 7th January, 2016 @ 19:04

@ Rip Off Fees

Ended up paying fees and changing Morgage company from Birmingham Midshire ,who by the way won't talk direct to public so be warned and alterations or remortgage will cost you a brokers fee !

To the Morgage Works who have a fantastic on line services which took me 10 mins to change and refix my other three BTLs

I won't bother mentioning the astronomical fees B M charge

Yes they are quick to give you your BTL but
My advice would be try one that will speak direct to you 😀

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James 7th January, 2016 @ 20:23

Just remortgaged with TMW and it was probably the easiest in 20 years of investing! My existing rate was 4.99 variable. They wrote to me, said 'go to this page on our website and pick a product you like the look of'. So I did. Skimmed through the list, picked a 2-yr, 1.44 over base with a £995 fee. Clicked on it, got immediate confirmation of the change and am now automatically on the new product. If I said it took me less than 60 seconds, I wouldn't be exaggerating...

Perfect!

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The Landlord 7th January, 2016 @ 20:36

@James
Nice!! Thanks for sharing. That's the beauty of sticking with the same lender, it's much more painless.

When you say "1.44 over base" - does that mean it's a tracker, so your actual rate is 1.94%?

Out of curiosity, did you compare that product against others on the market from other lenders? Or did you just stick with TMW for the convenience factor which you clearly benefited from?

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Stella 7th January, 2016 @ 20:39

@ James

But weren't you with them already and just transferred to another product?

I want to remortgage because west brom and mortgage express don't do BTL any more and my products come to the end of the interest only term so only choice is to sell up or remortgage with another company.

TMW say I need my broker to do this.

Thanks and thanks to everyone else who has commented on this thread... you are all a great bunch and it's good that we can all share and learn from our BTL experiences both positive and negative... anyone want to buy any houses?!

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The Landlord 7th January, 2016 @ 20:44

@Stella
lol @ "anyone want to buy any houses?!"

Don't worry Stella, we won't let you sink!

Can't you sell a few of them to give yourself breathing space i.e. absorb the costs of the SVR until you find appropriate mortgages (if it comes to that)?

Still think you should talk to a few BTL mortgage specialists.

Yeah, I assumed James didn't switch lenders, just got a new product with his existing lender! It's a lot easier, but in most cases, the lender you're with doesn't have the best product on the market! Mine certainly didn't!

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James 7th January, 2016 @ 20:53

Hi guys,

Yeah, same lender so perhaps not a full remortgage in the traditional sense, but I was utterly amazed at the simplicity, the fact they'd offered it without any hint from me, and the fact that whizzing through, clicking, and being gifted a much cheaper deal really did take 60 seconds.

The 1.44 over base is indeed 1.94. Why would they offer that when I was on 4.99? Don't think I'll question them too closely on that...!

Stella - get a decent mortgage broker. Have a chat with the Buy-to-let Business in Guildford, or Landlord Mortgages. Both long-term professional brokers who have all the available solutions. Don't give up, you'll get through this if you keep your nerve and don't stop looking.

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The Landlord 7th January, 2016 @ 21:08

Hi James,

Since you were on a variable rate, they probably advised you to do it just to tie you in for longer.

Without knowing all the figures, it's difficult to know how different 4.99% is from 1.94% + £995 product fee. Plus, since it's a tracker, they're probably betting on the base rate to rise.

They'll win in the long run, don't worry about that :)

Either way, you're happy with the deal and it was relatively painless, so all good! If my previous lender was offering a competitive deal, I would have definitely preferred staying with them- that would have saved me from multiple heart-attacks!

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ChrisE 7th January, 2016 @ 21:25

I have just spent three months sorting out two re-mortgages with one completing today and the other (hopefully) next week. I too feel your pain....... It just never ends the stuff they ask for. Anyway nearly there now.

I did it through a whole of market independent Ifa who talked me out of fixing them for five years - hope she was right!?! I swopped from BM to Metro Bank 2 year fixed at 3.39% with NO fees, free legals and free survey. I should save over £100 on each mortgage plus I took some equity.... Although with the new Stamp Duty And tax rules I'm wondering whether another BTL is really a good idea.

Loved the blog, made me laugh a lot. :0)

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The Landlord Avatar
The Landlord 7th January, 2016 @ 21:31

@ChrisE
Thanks for sharing. Interesting to hear the different policies landlords have taken out.

£100 saving on each property is sweeeet!

Just curious, did your IFA give you a reason for opting for a 2yr fixed over 5yr?

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Emma Lou 7th January, 2016 @ 21:57

I tried to remortgage from BM to Paragon, July 2015. Paragon dragged their heels & took so long, that I nearly lost the property I offered on. Eventually Paragon did a valuation of the property and said it was worth £140,000, this was between £15,000 & £25,000 less than 6 comparable properties, sold within 6 weeks and a half mile radius from my property!

Eventually, after weeks of sleepless nights, I swapped to TMW, who within a week had valued my property at the £155,000 I needed & sent out my mortgage offer.

I would never again cross paths with Paragon. My broker started 7 applications with Paragon (2 were mine), all were undervalued, taking months to get to this point and so never progressed.

I also renewed a 2 yr variable BTL with Natwest, took 10 mins over the phone.

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ChrisE 7th January, 2016 @ 22:20

I think she recommended the 2 year fixed as a much better deal for me, as opposed to the five year deals at the time. I'm limited to BTL lenders as my basic salary is £20k - like you said they're making it much harder to get mortgages now. Despite good equity %, squeaky clean credit rating, payment track record and extra income from commission and rentals these lenders are a lot more strict nowadays. Bahhhh

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Genesis 8th January, 2016 @ 11:11

Another good entry to your blog!

Just a note, your post about the Occupier’s Consent & Postponement Deed, made me look like a total genius when it came to filling in the forms for TMW. There my wife sat scratching her head not understanding what this was and why it was sent to us, and me glazing over it, fully knowing we were not going to sign it and to just smile and wave as it went on by. I must say it made me look like a mortgage king for a few seconds at least! So cheers for that post, it came just in time! Otherwise I would of been the one angsting over this strange request.

Well done for getting through the process, as I also found it was a real pain in the ass, but its done and a few months of head scratching and trying to learn every legal law that involves mortgages within a week, your better off by 10k over the 5 years! Spend it wisely!

Ow and look at that, im not a Nobody anymore!

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The Landlord 8th January, 2016 @ 12:42

@Genesis
haha brilliant! You're probably that one in a million person that gained from that post. I was hoping it would eventually help someone, just didn't know when/where. I'm glad it wasn't just a selfless moan from my part.

Congrats on the new status. All the best! :)

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Helen 8th January, 2016 @ 16:17

Hi there, I started reading your blog after making an offer on a property I intended to rent out. Unfortunately, despite having what I considered to be a quite hefty 25% deposit, a decent salary and relatively few outgoings, Natwest did me right up the pooper and only agreed to lend 60% of the purchase price. And they only came to that conclusion after I'd spent a total of 4 hours on the phone going through their lengthy application process which was tantamount to a*se rape - horrendously painful and humiliating. So given the lack of funds and the government's impending new tax regulations, I gave up on my investment dream in favour of making over-payments on my residential mortgage! Anyhow, the whole point of me commenting on your blog is to tell you that even though I don't need to keep up-to-date with this sh*t anymore, I still read your articles because they are feckin' hilarious. Keep 'em coming!

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Ali 8th January, 2016 @ 16:23

@ Helen, you should have gone to a decent mortgage broker with experience in the BTL sector. Talking direct to (I assume) your bank is rarely the best way to go. (never in my experience)

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The Landlord 8th January, 2016 @ 16:39

@Helen
Ouch, that is horrendous! I feel for you. As I blogged, the best deals are 60% loan-to-value (i.e. 40% deposit required), which makes it extremely difficult for most landlords to get a mortgage, let alone a good one.

Shame that it discouraged you from completely investing, but I totally get it. Either way, making overpayments on your residential is sensible nonetheless.

Stick around, just in case you get inspired again :)

Thanks for your comment, appreciate it.

@Ali
I think good BTL specialist brokers are better for those with little knowledge/experience with mortgages. However, they often don't have access to all the deals on the market- they work with certain lenders, which can be quite limiting when trying to get the best deals.

But in Helen's case, it sounds like the person she was talking to was the problem, as opposed to the principle of dealing with lenders directly. It's just common sense to make sure the borrower meets the basic criteria before proceeding with a lengthy application. My Natwest mortgage adviser made sure I was eligible before proceeding...

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David 9th January, 2016 @ 01:32

Nice article, good to see you are sticking with your repayment mortage strategy (opportunity for inbound link).

Really there was only one thing missing...

Your recommendations, the ones you gave the broker, the porn sites!

I did not know anyone paid for porn anymore when it is so easily available free.

Besides I know you are more an Escorts kinda guy!

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The Landlord 9th January, 2016 @ 09:20

@David
Hah, the free stuff is just 'regular' material for regular folks. There's still a premium on the "fetish" based stuff I was referring to.

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Linsey 9th January, 2016 @ 14:25

"I've just remortgaged and taken out a new BTL mortgage, both times using a broker, ( London Money since you were wondering), and I'd say it took me maybe 30 minutes to go through the application process and maybe another 30 minutes to complete all the paperwork. It was totally painless. I got an interest rate of about 2.8% on LTVs of 75%. I did pay fees of about £1999 on both, but these were for large mortages so over the course of the two-year fix, it worked out cheaper for me to go with the lower interest rate and higher fee. Both lenders - Santander and TMW- took my rental income into consideration and they didn't delve into my personal spending. Good job as that recent trip to Vegas might not have gone down so well. IMO a good mortgage broker with access to a broad market is you new best friend.

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The Landlord 9th January, 2016 @ 21:29

@Linsey
Thanks for sharing! Glad it was a relatively pain free process for you. Almost makes me hate you.

Big loan or not... £2k product fee.. Ouch!

Agreed, a good mortgage broker with access to a broad market is golden. However, most brokers are still limited to the products they can offer, so it's still always worth scouring the market for comparison.

Ha, yeah, that's the worrying part about going over statements, it's so intrusive. Literally anything could show up!

No need to tell me about the transactions after a Vegas trip... Dear Lord, my post Vegas statements are scary!!

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Chris 10th January, 2016 @ 16:42

Is no one going to request a blog entitled "Summer Break Thailand 2010 - Why I went through with it". Just a little light relief on these winter dark nights surely?

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Chris 10th January, 2016 @ 16:59

Wel I would.

Thank you for sharing, as ever, enlightening. God bless all who sail in him.

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Maro 11th January, 2016 @ 21:32

@ The Landlord

Your blogs are awesome and very entertaining. I'm a newbie private landlord and your site certainly helped me get started on this weird odd adventure. Just wanted to say thanks and show some appreciation!!

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The Landlord 11th January, 2016 @ 22:50

@Maro
Awesome to hear this place has been helpful, thanks for letting me know, really appreciate it.

Congrats on your new landlord status. All the best!

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Stella 23rd November, 2016 @ 12:31

Hi Everyone,

I am still battling through with my remortgaging issues and have sorted out all but one of my properties.

I've had a new financial adviser since July and he is very good and is managing to sort my mortgages out due to several interest only properties coming to the end of the term etc but there is one that I am stuck with and wondered if anyone has any suggestions.

The property is an HMO and my adviser says he's having problems finding a lender to take it on due to the fact that it's next door to a takeaway.

Apparently Aldermore is the only mortgage company that might take it on and the fees for the valuation are £600!

Are there any other options I haven't though of?

Thanks and Seasons Greetings

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HMO Landlady 23rd November, 2016 @ 20:02

Take it! The fee seems low in comparison and many mainstream lenders don't like HMOs. I've heard of them not liking properties ABOVE takeaways but never because they're next door. Perhaps they have some obscure socio economic rule .....

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