In need of a mortgage miracle

by Readers Question

8:29 AM, 1st May 2014
About 7 years ago

In need of a mortgage miracle

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In need of a mortgage miracle

I am looking for mortgage broker recommendations for BTL (1st time buyer, low credit score due to little credit card use, £70k deposit) In need of a mortgage miracle

I’m a first-time buyer, no previous mortgages at all, looking to buy to let because my future work means I’m not ready to settle down in one area at the moment yet and buy a residential property.

I have a deposit of £70k and I’m looking to get a buy to let mortgage of 75% LTV. The property price is £275k, it’s a 3 bed house in outer outer London.

My income is £35k, going up to £42k with bonuses. My problem is that until this year I haven’t used a credit card – so my credit rating is poor simply due to lack of use due to what I thought was prudent financial planning…silly me!

I’ve never had problems with debt at all – just never really used credit. Virgin were going to give me a mortgage in principle – except my credit rating was too low.

I’ve been on the electoral roll for over 20 years. I’ve had a look at my credit history and besides a poor score, there’s no errors or mishaps.

I can’t really wait endless months to boost up my credit rating by using a credit card – so I’m looking to hire a mortgage broker/advisor to negotiate with lenders that offer BTL to first-time buyers.

I would be very grateful for your help here.

Thank you very much.

Madeline


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Comments

Mark Alexander

8:49 AM, 1st May 2014
About 7 years ago

Hi Madeline

Another reason you might be having problems is that lenders have been warned about first time buyers abusing the buy to let mortgage system to buy a home to live in which they could not otherwise afford.

If you were buying two or three cheaper properties up North as investment they might be more inclined to believe you.

There are a few lenders who may be able to take a commercial view but expect them to give your finances a thorough grilling. If the property you are purchasing as an investment is close to where you currently live and work then you may well struggle to overcome their scepticism.

You may well need to prove that you move around with work quite a lot, can you do that? You mention that you have been on the voters roll for the last 20 years so if that shows that you do indeed move frequently with your work that will certainly help to support your case. On the other hand, if you've lived within a 30 mile radius for the last 5 years or so that will obviously fuel the lenders scepticism.

I am a retired mortgage broker so I can see why this case will be a very tough one to place.

What's the big rush though?

If you have been a tenant for 20 years what's another year going to matter?

You have raised a very good point regarding credit, i.e. if you never borrow anything then there is no evidence that you will honour a credit agreement if/when you enter in to one. You should consider buying a few things you need on interest free credit as that's good financial planning anyway. If I need a new bed or sofa I often go for the interest free credit deals even though I can afford to pay outright. I also pay for everything on my credit card and pay the balance every month. I always have a car on a PCP deal as this helps my credit and it also enables me to budget and to have no surprises in respect of depreciation when I come to swap it for the next new model.

Your credit score is a very important asset as you are now finding out.

Other things you can do to convince a mortgage lender are to show how you have managed to save up £70,000. Show them statements showing how your savings have grown over time. Also provide 12 months of bank statements from all accounts showing your income and outgoings.

One thing you've not mentioned is how much the property will rent for and how it will be managed. How will you afford to maintain it and pay for the mortgage if there is no rental income coming in?

I wish you well and I anticipate that a few mortgage brokers will post here.

We do not allow people to post email addresses, website links or other company information. However, our sponsors have contact form on their member profiles so you will be able to get in touch with them if they think they can help you.
.

BigMc

8:51 AM, 1st May 2014
About 7 years ago

Its a great principle never to run up credit or store card debts because of the interest rates. However, if you use it for all your normal expenditure and have it set to clear the balance in full by direct debit, you will:-
1) Never forget to pay
2) Never get interest or charges
3) Possibly earn cash back
4) Quickly build up a great credit rating
It is probably worth waiting to gain the best rates, if not you can get a "poor credit" mortgage and switch once you have upped your score.

Good luck


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