Remortgage solutions for , recent self-employed, issues with past accounts, declining income in recent years and much more
- Why do lenders look at my earned income rather than my rental returns?
- My earned income has dropped considerably in recent years and this is preventing me getting a remortgage even though I have a lot of equity within my portfolio of properties.
- I’m recently changed jobs and become self employed and I cannot obtain a Buy to Let remortgage.
One of the biggest grips is Buy to Let lenders applying affordability rules on established Buy to Let investors.
In my opinion the best way to assess risk is to look at the individual’s track record. Computers make this mind numbingly easy as the conduct of a mortgage(s) is shown on someone’s credit file. The greater number of well maintained mortgages that a Buy to Let Landlord has the better prospect they should represent. Underwriting rules should be a secondary concept but they are being more prevalent as the lenders are sucking them into the same box as a regulated residential mortgage, and quiet why the lenders do this is anyone’s guess, it’s not because of the Regulator who categorizes Buy to Let as a ‘business’ and therefore correctly outside of the need for consumer protection.
With a Buy to Let remortgage it could be a simple case of wanting to reduce the monthly cost by switching to a better rate. Where’s the risk in that if the previous mortgage was paid at a higher level? Extending the term is another popular one as the client has realized they want to defer realizing the capital gain and prolong the period of rental income, and if the rent has been rolling in at a desirable level, again where is the risk?
Buy to Let remortgages to raise additional money I think fall into two categories:
i) sensible: where they should be no need for checks beyond rental income and mortgage conduct.
ii) uncertain: where greater information should be gathered.
On the sensible side someone who is raising money for tangible home improvements such as increasing the property size through an extension or adding a further bedroom should again be a ‘no brainer’ for the lender provided the client can demonstrate the plans will add to the rental yield or make the property more marketable. I would also add raising money for a deposit on a further Buy to Let in this camp; as clearly the capital is going to be working in a domain the client is already familiar.
I believe repayment of debt or raising money to sustain a certain lifestyle in the ‘uncertain’ category. Here the underwriter needs to exercise their grey matter as it financially it could be prudent for the individual to do this as a ‘one-off’ but on the flip side they may be in a cycle of in-debtedness that is actually leading to eventual mortgage suicide. Also would also include in this category the speculative use of remortgage capital such as: a new business venture or investment purchase. In these instances there is need underwriter intervention.
At Niche Advice we havesolutions for low income or applicants who are: contract works; have just switched jobs; recently been self employed; or who are retired. Plus there is no minimum level of earned income that needs to be demonstrated.
For more information on getting a Buy to Let remortgage with low income please contact us on 020 7993 2044 or alternatively complete the enquiry form on the right-hand side of this page.
Payam Azadi is a partner at Niche Advice Ltd who are Independent Financial and Mortgage Advisers in London.