My income has dropped considerably yet I have a lot of equity within my portfolio of properties and need a Buy to let Remortgage on low Income Product.
One of the biggest pains in my life is how lenders have all of a sudden decided to put in place affordability rules for Buy to let investors which has a huge effect on Buy to let Remortgage on low Income type of products. There is simply no rationale to support the need for this move and it has been swept up but the ‘responsible lending’ initiative implemented on a residential mortgage market which is regulated and aimed at protected the ‘vulnerable’, that have just one property to their name, and not the astute investor. This move has stifled landlords with low earned income from getting mortgages which is crazy as often these people are thriving as they have more time to direct towards the success of their portfolio.
The buy-to-let self certification and interest only mortgages have performed well as rental income is the determining factor, not earned income, and from the lender’s perspective the monthly payments are smaller and more manageable as no capital is being repaid. I appreciate it is a different story on residential mortgages but that is not the point.
If there was an underlying problem why are investors choosing property rather than other vehicles? It is because it reliable, stable and produces good yields.
[pullquote]All we ask is that you have let a buy-to-let mortgage for at least 6 months in the last 18 months. Your bank statements are well maintained i.e. within an agreed overdraft limit without bounced items. No problems on your credit file.[/pullquote]
With the tools available to lenders they should know better. Equifax or Experian credit reports show up missed mortgage payments, CCJs and defaults and other ills. When combined with a bank statement this should be the only underwriting needed to see if someone has maintained their finances. Don’t get me wrong I wouldn’t want them to lend to the long-term unemployed but to insist on an employed benchmark of £25,000 earned income to prove you’re a good egg is silly. How so? Well you could earn £25,000 from working in a shop with £5,000 from the lettings OR earn £10,000 with £50,000 in rental income. In this instance there is more Buy to lets mortgage choice in the first camp, which is nonsensical in my book.
That said, as you might have come to expect from Niche Advice we have ripped up the rule book, and can provide solutions to the problem of low income on Buy to lets:
How we can help with Buy to let Remortgage on low Income plans. Well we look behind the plain facts:
- Career breaks and extended holidays – no problem
- Pension income, state or private – no problem
- Savings rather than income – no problem
- Investment income rather than earned income – no problem
- Regular income from family – no problem
- Multiple jobs – no problem
- Recently employed or self employed – no problem
For more information on getting a Buy to let Remortgage on 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.