I have always found one particular lender on our panel hard to consider as they’ve always represented (in my mind) the last resort lender. As 99.99% of my clients are prime, own ‘standard’ properties, have sufficient income and mortgage amounts, this lender has never really been on our radar.
However, the enquiries which I have been getting stuck on just recently have been for properties valued at less than £40k. Only one or two lenders will consider these but the hoops you have to jump through rule out the majority of those enquiries. And of those that can be agreed, we’re still only talking about valuations of £39k or £38k anyway.
However, I had a call today from this, shall we say more “adventurous” lender and they told me of their updated proposition. It’s not cheap, but you have to ask .. compared to what? I mean, if there is no other choice, then actually they are the cheapest because there is no other option.
They will lend as little as £3k, they have no minimum property value, they told me they have completed on properties of £25k value! Therefore, if any investor has such properties in mind and they don’t want to use all their cash to purchase, they can – via us of course!
The deal allows up to a possible maximum of 60%LTV, which includes the lenders fees, so only a 40% “ish” deposit is required. And on a £35k property, that’s only £14k outlay.
This particular lender is for when all other lenders say ‘no’. i.e. this is not a like for like comparison, and mustn’t be treated as such, but this is a deal for when there are no other options available.
For example
- property purchases or remortgages for properties valued at less than £40,000
- credit impaired applicants
- non standard construction including bungalows, high rise, defective, ex-council & semi-commercial properties
- Micro Mortgages from £10,000 – £30,000
- Shared Ownership available up to 100%
- many income sources accepted – employed, self-employed, DWP, pension income, companies trusts and funds
Now, don’t get me wrong, this is not a ‘cheap as chips’ range of products that you might get from a traditional BTL lender, but it is, however, a BTL deal that you can get when no-one else will lend!
For example
- purchase price of £38,000
- net mortgage advance £20,750
- initial monthly mortgage payment £232.31 on a repayment basis (i/o payments only allowed on loans above £25k)
- interest only on BTL 25 year term mortgage basis
- interest cover at 120% of pay rate
Who does this work for?
It doesn’t have to be an ‘extreme’ example of all factors as detailed above to qualify. For example, if you are a traditional BTL landlord who owns, or has seen an opportunity to own, a property of less than £40,000 in value (most won’t go less than £50,000 as we know), then this product allows you to buy / own unlimited properties … without having to use 100% of your own cash to buy them!
And the benefit of that? You can buy more!
Every deal is on a case by case basis and is manually underwritten.
Useful info;
- Properties must be let on an AST basis
- Available in England, Scotland and Wales
- Minimum age 18, maximum age 80
- ERP’s during 1st 3 years at 4/3/2%, then 1% thereafter
Summary
When no other lender will say yes, there are deals available throughout England, Scotland and Wales from a long established BTL provider who likes to say yes.
If this is of interest and you would like to have a chat please leave a comment below or see my member profile – linked at the top of this article.
Regards
Howard
I am absolutely amazed that in this current economic climate with the government making people down size to smaller homes or pay a “bedroomTax” and more people having to rent because they cannot afford to buy, that a buy to let landlord cannot obtain a mortgage for property valued under £40,000.
Property buying motives intrigue me based on the fact that we all think very differently so I thought I share a bit of deep thinking with you.
