Tag Archives: Lloyds

Who will lend on a property with no bathroom? Latest Articles, UK Property Forum for Buy to Let Landlords

I’ve got my heart set on a property going to auction, which has no bathroom.

I can get a mortgage to easily cover the cost of the property. But the problem being, it’s got no bathroom.

Went to Lloyds, and delved into what their surveyors will pass an approval on, and basically saved £300 on a survey, by finding out prior to ordering a survey, that they won’t pass a mortgage unless it has a kitchen, and bathroom (in no matter what condition though).

Would someone be kind enough to enlighten me as to what products are out there, that would lend on such a property?

I believe The Mortgage Works have just pulled a product which would have covered this? Who will lend on a property with no bathroom

Cheers

David


12.5% return on cash invested on a newly refurbished Manchester based development Commercial Finance, Latest Articles, Property For Sale

Last week I was presented with a Manchester based buy-to let investment opportunity which looks particularly attractive. The gross yield is just over 11% but with the benefit of gearing, and having allowed for all costs, the cash on cash returns are coming out at 12.5%. Manchester Buy to Let

I have done some due diligence (you should always do your own though, please don’t rely on mine) and part of that was checking out the availability of finance on these properties.

The only possible drawbacks I can see thus far is that the maximum mortgage is 65% of value plus a lender fee of £995 added to each loan. This is due to the properties being priced at £42,500 and being sold as a new development. The issue with this is that BM Solutions are the only lender offering terms. As BM Solutions are part of the Lloyds Banking Group that can sometimes cause problems due to the group having a rule not to provide more than three mortgages to any one client. The Lloyds Banking Group includes Lloyds Bank, BM Solution, The Mortgage Business, Halifax and C&G.

If you can live with that, and especially if you are married or have a partner, and you and your partner have no mortgages with any of these companies, you could, theoretically at least, buy six of these properties, i.e. 3 each.

The alternative, of course, is to buy the properties for cash and then look to refinance them based on market value after say 6 months.

In the meantime, these are the numbers that came out when I analysed the deal using the Property118 Landlords Calculator:-

Property valued at £50,000 each (15 available, 18 already sold at full price)

Discount offered to Property118 to sell the remaining units 15%

Net price £42,500 each

Monthly rent £400 (based on comparables provided by local agents)

Gross rental yield 11.29%

Mortgage £28,620 based on 65% borrowing plus £995 lender fee added to advance

LTV 67.34%.

Deposit required for each property £13,880.

Interest rate 4.84% (Loan via BM Solutions – IFA to advise best product, this one was selected at random for illustrative purposes)

Mortgage interest £115.34 per month

I have estimated that 35% of rental income will be required to fund the costs of; advertising/letting, management, Gas checks, maintenance, ground rents, service charges and void periods This equates to a monthly averaged cost of £140.

Therefore, cashflow based on the current interest rate is £144.57 per month

Based on these figures the return on equity is 12.5% on cashflow alone. This is net annual cashflow expressed as a percentage of the equity in the property. This calculation is also referred to as; return on cash, cash on cash return, return on capital employed/invested, ROC and ROCI. A 12.5% return on equity is far better than you would get in a bank account and far greater than you can borrow money for too. Over the long term you may also wish to factor capital appreciation into the equation too.

This deal breaks even when interest rates hit 10.9%

If this is of interest and you would like to download details of the development with a view to arranging a viewing and/or making an offer please complete the form below.


BM Solutions scraps minimum income rules on buy to let mortgages Buy to Let News, Landlord News, Latest Articles, Mortgage News, Property Investment News, Property News

BM solutions logoBM Solutions, the leading BTL lender from the Lloyds Banking Group, has removed its minimum income requirements for all buy-to-let products in its range.

As from Monday 10th June, Birmingham Midshires will finally be joining a handful of other lenders by providing experienced property investors with BTL mortgages without the need to satisfy any minimum income levels at application.

Even though a borrower can still only have 3 mortgages across the Lloyds Banking Group brands (which includes Halifax, Lloyds TSB, C&G, BM Sols, TMB, Intelligent Finance etc.) we’re pleased to see that they have removed the minimum income required restriction, recognising that many investors are self employed and even though their accounts may show low net profits, that the rental income generated is the true indicator of affordability.

The ‘broker only’ lender has previously required a minimum income of £25,000 for all applicants but this rule has now been removed as they acknowledge that buy-to-let affordability is based on rental income, rather than personal income. This, they say, makes it more accessible to more landlords.

Your Broker will tell you the behind the scenes updated ‘fine print’ for all BM deals, including that certain provable income will still need to be supplied as part of the application process. BM has also changed its rental affordability calculation, which will now be based on 125% of the mortgage interest.

They say this is because it is the right thing to do to ensure borrowers are in the best possible position to be able to manage future payments if their circumstances change.

BM Solutions “One Minute Mortgage” process remains in place and is available to Brokers 24/7. The One Minute Mortgage provides mortgage decisions in less than one minute and allows borrowers to submit additional borrowing and multiple Buy to Let applications.

With a well tried and tested system, now coupled with ‘no minimum income’ requirements, BM Solutions are clearly hungry for more BTL business.

Changes will come into force from Monday 10 June.

To contact our recommended mortgage broker please complete and submit the form below.


Insolvency compensation rules for deposit and mortgages Landlord News, Latest Articles, Property News, UK Property Forum for Buy to Let Landlords

Insolvency compensation rules for deposit and mortgagesWhat are the compensation rules when a customer has both deposits (over £85,000) and an outstanding mortgage with the same failed bank (either offset or standalone)? What happened with either B&B or Northern Rock customers in this situation?

I wrote the following letter to both Intelligent Finance and the Financial Services Compensation Scheme but they gave differing responses. Continue reading Insolvency compensation rules for deposit and mortgages


BuytoLet Lender BM Solutions allows Student and Benefits tenants Buy to Let News, Landlord News, Latest Articles, Property News

BMSBM Solutions relaxes its BuytoLet lending criteria to allow landlords to rent to students and benefit claimants

It was recently reported that BM Solutions was looking at changes to its BuytoLet underwriting criteria and the rumors were that they would be looking to remove its £25,000 minimum income requirement.

The initial reaction by some market commentators was that to remove the £25k minimum income would lead to the door being opened to low income households who are more at risk of defaulting, albeit that it could open the door to buyers outside of London, and would be of particular help for self-employed clients.

Another rumored criteria change was regarding the Lloyds restriction on its BuytoLet criteria which only allows a maximum of three buy-to-let properties per customer, across the whole of the Lloyds Banking Group (which now includes major lending brands such as BM Solutions, Halifax, C&G).

So, what has changed? How have BM Solutions relaxed their criteria? Previously, the lender’s list of exclusions included student lets, tenants claiming housing benefit, rent rebates or rent allowance, asylum seekers and tenants benefiting from diplomatic immunity.

With immediate effect BM Solutions has now adjusted its criteria to allow BuytoLet landlords to rent properties to students and benefit claimants. They are also now willing to offer loans on properties with a maximum of five occupants, a stipulation attached to all properties, although BM Solutions has never lent on House of Multiple Occupation, where tenants sign individual tenancy agreements and this still hasn’t changed.

This news comes just over a week after The Mortgage Works has also in dropped its restriction on lending to landlords with tenants who are on housing benefits.

Other lenders which will lend to landlords with student tenants include The Mortgage Works, Godiva, Abbey for Intermediaries, Woolwich, Aldermore and Virgin Money.

Howard Reuben, Principal of H D Consultants says that these most recent criteria changes are testimony that Lloyds is pursuing more business. He says “This criteria update appears to back up the news that BM Solutions is looking increase business via criteria rather than chasing the rate. This is a controlled measure which will provide some relief to a number of landlords”

From 19th March, BM Solutions has announced new semi-exclusive products starting at 3.89% up to 75% LTV available for purchase and remortgage, and which also benefits from a £500 cashback too.

To discuss any Buy-to-Let deal with our preferred broker please call us on 01603 489118 or email info@property118.com

If you would like to add your own requirements and search for the most popular available Buy to Let products please click here

Buy to let auction property finance calculator


Caught out by Lloyds three mortgages rule Cautionary Tales, Guest Articles, Landlord News, Latest Articles, Property News

Readers WarningJust in case you are not aware of Lloyds three mortgages rule here’s how it caught me out.

I bought a run down terrace house last year to refurbish and wanted to sell once complete. However, to finance a new opportunity, which came along to soon, I decided to get a buy to let mortgage with BM Solutions.

I was offered the mortgage in principal subject to valuation so I paid the valuation fee of over £400 and had the property valued. It all came back fine and I was sent a mortgage offer last week Continue reading Caught out by Lloyds three mortgages rule


BM Solutions BuytoLet rates reduced Landlord News, Latest Articles, Property News

BM Solutions BuytoLet rates have been reduced across their five and 3 year fixed rate range in line with other lenders reductions and a decrease in LIBOR.

There are also minor adjustments in the cost of some tracker rate products, but it is the cost of longer term fixed rate BuytoLets that reflect more accurately the direction the market is taking and its revised expectations for future inflation and cost of borrowing figures. BM solutions have always been a significant barometer of the industry due to their substantial market share. Product details showing the decrease in cost over the product term are: Continue reading BM Solutions BuytoLet rates reduced


All change on the buy to let mortgage front Buy to Let News, Latest Articles, Lettings & Management, Mortgage News, Property Investment News

Co-Operative Bank buy to let mortgage customers can breathe a sigh of relief as the wholesale scrapping of interest only loans does not include buy to let borrowers.

The bank’s specialist property investment subsidiary Platform will continue to offer interest only deals to landlords. Continue reading All change on the buy to let mortgage front


Luxury home sales hit new high as rest of market falters House Prices, Latest Articles, Property Market News, Property Sales & Sourcing

Sales of homes worth £2 million or more are rising – and most are in just four upmarket neighbourhoods of London.

Just over half of all multimillion pound home sales last year were in swish Kensington, Chelsea, Westminster or Camden, while 76% (1,161) of £2 million plus sales were in London. Continue reading Luxury home sales hit new high as rest of market falters


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