Stupid stupid Banking systems!

by Readers Question

11:25 AM, 28th December 2016
About 2 years ago

Stupid stupid Banking systems!

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Stupid stupid Banking systems!

Could not get a £30k BTL mortgage on a £380k house that has had a >95% occupancy since 2002.stupid

The conversations with various banks went something like this

Ah Hamish, you’ll have had your tea.

I have that Banker. We’re here for a modest BTL mortgage and you have various products that interest us.

Aye Hamish, we have and all your ratios are ‘well in’. Mrs Hamish’s ratios are not bad either.

Hamish, We see that aside from your BTL’s you operate a limited company. We completely understand (and if we were allowed to comment would probably agree with) the remuneration structures you currently have in place; the company accounts look good. All above board; splendid.

This does however leave us with a tiny problem. We cannot include any of your BTL income or profit (however the Government decides to calculate it), we cannot consider your 20+years of excellent BTL accounts and your tax returns do not show a minimum of £25k income for the last 3 years. Besides, you had a take-away last week that some would call frivolous and may suggest a slide into unchecked spending.

Banker, what about our tax returns from before that?

Hamish, it has to be the last 3 years. Now, we know why your finances are structured like that and we completely agree that paying yourself more would mean the only beneficiary would be HMRC. But it means we can’t tick the box. You see, having a 3 years tax returns each showing £25k pa is important for our liquidity check list. Lending to someone who has earned less would be wrong and as a complete banker we must look after the incapable because we don’t want a credit crisis on our hand do we?

But I could fire myself right now for complete incompetence; no job is safe or stable not even yours.

Hamish, don’t get upset, we agree,,, your 999 credit score, everything paid off, hundreds of clear and unused credit cards all taken out simply to get the 10% off introductory offer, clearly a canny low risk punt ,,,,, give me a mo’.

Hamish, I have discussed this with Saruman and maybe, just maybe if you paid yourself more for 1 year we could tick my precious box-sis and you could join us. You haven’t yet filed your 15-16 return. Perhaps if you could come back in December with your 2016 tax return showing a different story for that 1 year, adjust you 15-16 return-sis before casting it into the fires of Mount HMRC Doom on 31 Jan 17?

But Gollum, This is absolutely crazy. Not only did this conversation begin as a pastiche of a sketch from I’m Sorry I Haven’t a Clue it seems now to be developing into a malformed version of an overlong book I was force fed for my Eng Lit o-level. Besides, it is only in the last couple of years that we have been able to put any money away for our dotage what with kids and universities and taking risks to start the company after being made redundant; a move that is now beginning to pay back all the hard work. After all, it was your bank that screwed our pensions up in the first place. Do remember Thatcher, the Dark Lord Sauron? the ’80’s, the battle between The Ring of Banks and the alliance that fought against that miss selling? Oh, you are too young. Bless.

Hamish, did you say pensions-sis? Can I see your precious Company account-sis again? Retained profit is small.

Gollum, over the years we were prudent. We saved when others were seduced by the cheap credit and irresponsible lending practices forged beneath Mordor. We never went on expensive holidays outside the Shire. We stayed and we grew our own yellow labels, buying second and third hand. I do all my own burrow maintenance and so we have nearly paid off our family home mortgage. When we retire I don’t want a mortgage. I want us to be able to pay the council tax and use 1 bar on the fire at the same time (eating optional). Therefore, even though it is quite late in life, I am putting what I can into my pension. Isn’t that what the Servants of Sauron want us all to do?

Oh Dear Hamish, the Underwriters don’t like it if there is no retained profit-sis

Underwriters-sis?

Hamish, these are the wraiths who get others to cough when you can’t and we have to sell your mortal remains and don’t get what we think we are entitled to. They ensure that If we screw up we all still get paid and you get the bill. These Names live deep down in the fetid bowels of the banking world adjacent to the Osborne’s department of spurious taxation where they toil away blindly; prevented from any contact with the real meaning of risk.

But Dear Sméagol, you must try and remember, I am a mere human. The BVI’s are too far and the map on the inside cover of the book doesn’t extend that far. if I retain profit I would have to pay corporation tax on that profit to Chief Orcs. What would be the point of that when at the moment I would be much better off putting it into my pension before the end of the Company Year?

Hamish, you must understand, I cannot agree, The Eye of Sauron is amongst us again but in leather trousers this time. She together with an ex-transport minister, the new Servant of Morgoth, have indicated no changes to Osborne’s approach, powers that be, must tick my precious box-sis mumble mumble prudent lending rules have been forged mumble mumble now please stop being reasonable.

Like I said, stupid banking systems

Hamish



Comments

Neil Patterson

11:29 AM, 28th December 2016
About 2 years ago

Hi Hamish,

Stupidly, from a customer service and future business perspective, the loan amount may be too small for them rather than the risk element.

Howard Reuben CeMap CeRER

12:25 PM, 28th December 2016
About 2 years ago

That was too long to read, so I am responding to the headline and first line instead.

The problem, as I see it, is that you went straight to a bank (who of course is most likely to say no nowadays) rather than working via a BTL specialist mortgage brokerage.

Neil may be right that £30k is too low for them to lend, but there are many other lenders who would say yes.... and probably quicker than it took you to write that tome above.

As independent mortgage advisers, we have a huge access to market including high street banks, specialist lenders, private client finance houses, P2P lenders and pension funds, we rarely ever say no.

Working with us all starts with a comprehensive Fact Find discussion. If you would like to see if we can assist, simply send me your initial detailed enquiry (in plain English, of this World, please 🙂 ) and one of my Team will contact you to offer our services.

Hope that helps

Howard

H B

16:32 PM, 28th December 2016
About 2 years ago

Perhaps they are worried that if you are short £30k then you may be having cash flow issues.

Hamish McBloggs

10:56 AM, 31st December 2016
About 2 years ago

Ah, might be a long read but we all need a bit of fantasy at Christmas. It was written before the sherry was consumed.

Banks should not be permitted to offer BTL products. Even by their own rules they can gear the 'average' family too high and reject (my opinion) sensible people. The very process of seeking out specialist lenders would be a filtering exercise in its own right,

H B, The loan amount could have been a lot higher but after discussion and in the case £30k was acceptable. It was rejected by the underwriters who did not like the minimal retained profit in my company.

Howard R. Yes, should have approached a specialist. I will when I want to raise capital for the next investment. But aren't specialist lenders subject to the same lending rules?

Thanks

Hamish

Howard Reuben CeMap CeRER

14:38 PM, 31st December 2016
About 2 years ago

Before the sherry was consumed? Lol.

As an independent Broker, I can confirm that not all of the banks who I provide my Clients with access to, are all subject to the same rules.

The rules are there for UK banks to follow, but we also work with foreign based banks who lend in the UK too.

That's why we rarely say no, because we have a very comprehensive service proposition.

Happy new year to all.

Colin Dartnell

15:07 PM, 31st December 2016
About 2 years ago

Banks are the worst people to ask for money. They will only lend when you can prove that you do not need the money. They are the most unhelpful people in existence!

Trawl the internet for cheap loans as you are not wanting to borrow much. If it is only a short term loan try using your paid off credit cards and then do balance transfers to keep the rates low.

If you are likely to borrow regularly use a good broker, but don't use one that charges you any fees, their income comes from the loan company.

Good luck Frodo, sorry I mean Hamish.

Howard Reuben CeMap CeRER

18:20 PM, 31st December 2016
About 2 years ago

Reply to the comment left by "Colin Dartnell" at "31/12/2016 - 15:07":

"their income comes from the loan company" ...... With respect, you clearly don't have a clue what a GOOD broker does, or how we earn any remuneration.

For example, just before Xmas I carried out a portfolio review for one of my Clients, I carried out comprehensive independent market research and the products which we switched 10 (yes,10) mortgages over to, produced a ZERO commission for me or my Firm as the lender does NOT pay anything to Brokers for those products. Yet, my Client received a thorough service backed up by insured advice from a professional regulated Broker and he is now saving £2k per month in mortgage interest payments.

That is what a good broker does, and that is why your generalisation is too simplistic.

I concur that there is a difference between a mortgage salesman and a Broker, and that is the comparison one should make when carrying out due diligence. The last place any responsible borrower should go is a non-advised online comparison website.

Caveat emptor.

Happy and prosperous new year to you all.

Howard

Colin Dartnell

10:59 AM, 3rd January 2017
About 2 years ago

Reply to the comment left by "Howard Reuben" at "31/12/2016 - 18:20":

Firstly may I apologise, offence was never my intention, but with respect I do know what a good broker does, over the years mine has done an excellent job saving me money including regular reviews of my portfolio but has never charged anything. Currently due to my broker I am enjoying (if that's the right word) borrowing rates of 1% on £1.5m and 2% on a further £2m amongst my mortgages.

The reason for my 'generalisation' on this post is that Hamish is looking for a new mortgage on which commission would be paid. A review of his current mortgages could realise the funds he needs but even then commission is likely to be paid.

I did not suggest going to a comparison site for a mortgage, but with a lot of research a good idea of what is available can be found before approaching a broker and compare what they are offering.

Happy New year to all

Rachel Hodge

11:33 AM, 3rd January 2017
About 2 years ago

I enjoyed your post, Hamish. Maybe you can turn your literary skills into cash, and avoid the lender!

Hamish McBloggs

20:54 PM, 3rd January 2017
About 2 years ago

Reply to the comment left by "Howard Reuben" at "31/12/2016 - 18:20":

Howard,

Thank you. I shall keep your details.

atb

Hamish

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