The Art of What’s Possible

Hi! Steve here!

This week I’d like to share some solutions to problems to help you overcome any fixed ideas you may have or at the very least, open your mind to what is possible out there.

I regularly come across the same beliefs that in many cases are inaccurate. This can stop clients taking action and moving forward. Whether it is a new main residence purchase or an investment property where a refurbishment is required followed by a refinance, there are many scenarios where people think because most lenders adopt a particular rule then that is the rule of everyone.

Let me explain...

We deal with a lot of landlords and investors. Many think that if they buy a property for cash, add some value and want to refinance against the new valuation that they have to wait 6 months from the date of ownership. This is incorrect. Some lenders adopt this rule, others state 3 months, whilst 1 month is possible. The same goes for buying to renovate and sell on.

Ah, but what about the 6 month rule? Well yes, some lenders won’t let another person purchase until 6 months have passed since you bought the property but there are mainstream lenders who don’t have a minimum period. As long as there is a feasible explanation, like renovating to add value and sell on for a profit, then no problem.

Because a lot of clients get told one thing from their bank and in some cases try another lender before coming to us, their perception is that other lenders will underwrite their case in the same manner. Imperfect credit files are a good example of this. Just because most lenders scrutinise the last 6 years and score accordingly, doesn’t mean to say every lender will. The most recent past is more important but if you’ve had some missed payments, defaults or even CCJs inside the last 3 years, this can be overcome with the right lender and explanation summary.

Lending for the self-employed has always been more problematic but there are certain lenders more geared up for this. For instance, it is possible to get lending with just one year’s accounts. In practice though, this doesn’t always work because with some businesses, there are a lot of costs to come off the profit in year one that even out in year two. Fine. Some lenders will work off two year’s accounts but instead of averaging out both year’s income, they will work on the latest year. This is great because there can often be a big discrepancy between the two years. If someone has ￡20k profit in year 1 and ￡50k profit in year 2, this can be the difference (assuming 4.5 x income) of ￡157,500 on a mortgage versus ￡225,000.

For landlords, how much they can take out of their property is paramount in a lot of cases, to allow them to expand their portfolio and add value along the way. After the mini budget when interest rates went up and stress tests for BTL got tougher, it was difficult to make a case for some investment properties. Well, some lenders are more lenient than others with stress tests. This means you can pull out more money on each property. Also what you have in the background is viewed differently from lender to lender. Having been in the BTL market for nearly 20 years and transacting business with most lenders on a regular basis, we have so much data on this to help clients maximise their portfolio.

So whether you need in excess of 5 times income through to being able to get around a credit issue, we are probably dealing with a case just like yours right now.

Even if it sounds impossible to you, you’ll never know unless you ask the question. That’s what we’re here for and you're not alone.

So, don't hesitate to?get in touch?with our team to discuss your requirements. There's no silly question and we are genuinely here to help.

That's all for now!

Steve

Express Mortgages is a trade name of Express Mortgage Services Ltd. Express Mortgage Services Ltd is authorised and regulated by the Financial Conduct Authority. [Reg No: 474427] Company registered in England & Wales no. 05167662

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