Release equity on your buy to let property but still, keep the competitively priced existing mortgage in place even if your current lender does not give consent for a Buy to Let Secured Loan.
There are some excellent buy to let existing first charge mortgage rates which landlords would not want to replace but still would ideally like to release equity from the properties.
A second charge mortgage could be the ideal solution as they can go up to 75% of the property value (to include the existing first charge). Affordability is assessed on rental coverage and can also include surplus earned income to support any shortfall.
However, this may not be as straight-forward as it sounds. This is because certain first charge lenders may be reluctant to grant their consent for second charges, normally for one or a combination of the following reasons:
- It’s against their company policy.
- They do not offer this facility on certain products, typically those with a drawdown facility.
- Until you have been a customer with them for some time.
- Unless the first charge account has been maintained impeccably i.e. no missed payments.
- Unless the second charge is used for home improvements.
- Non-disclosed internal reasons.
We know of the following lenders where there have been difficulties obtaining consent for second charges depending on the product are: Aldermore, Bank of Scotland, Barclays, First Direct, Godiva, Halifax, Handelsbanken, Kensington, Kent Reliance, Mortgage Express, Rosinca Mortgages, Nationwide, Paragon, Principality, Rooftop, Santander, The Mortgage Works, Topaz Finance, UCB, Wave.
The good news all is not lost, as the second charge mortgage lenders may be able to proceed with the permission from their first charge counterparts. They do so be taking a charge on the equity in the property rather than on the physical property itself. It’s known as an ‘equitable charge’ and for this extra facility there is likely to be an interest rate loading to account for the added risk.
Niche Advice offers suitable advice to buy to let mortgage holders that are looking to raise money on a remortgage or second mortgage (secured loan) basis. For more information please complete the Contact Form on our website on call T: 020 7993 2044.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines.