OpenRent Community

Portfolio landlord, struggling with mortgage

Hello people , I am sure I can get some valuable suggestions from you.

My broker is struggling to get me a mortgage as a portfolio landlord.

I started property investment in august this year. Four month experience so far as a landlord. I had 50k in savings that used as deposit for two houses. Raise equity / additional borrowing of 50k on my main house.

I used 25k as deposit for a third house. Getting the fourth property mortgage is proving challenging. I understand I am now classed as a portfolio landlord and certain rules now apply to me.

On the fourth property:
We got a lender at the early stage, I passed the credit checks and all, few weeks into it, they pulled out because they claimed

  1. No landlord experience ie 2years
  2. I manage the properties myself
  3. My partner (wife co investor) has changed job recently
    Etc

My broker said he’s still searching for a different lender.

Has anyone been in this position before ? Any suggestion on how to progress with this?

Your response is always appreciated.

My advice Do not grow too quickly. If you have "rough " tenants you will come unstuck

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Sure. But here I am. I have to swim out. Any thoughts on I can possible do to help my position? Switching broker?

Someone else will have the answer. i do not buy with a mortgage I just save up and buy . That works for me

Portfolio mortgage rules are onerous you aren’t putting much money in to buy 4 properties, I would agree with Colin that it’s better to go slowly initially. Things can and do go wrong and with heavy borrowing you can easily get into trouble.

I would have thought you would struggle to get the 4th BTL mortgage. Only option I can suggest is if you are able to borrow more against your own home then use that to finance it which means you avoid the portfolio rules. You can still claim the tax credit as purpose of loan would be business and interest rates should be lower, clearly you would need to have the equity and income to support the borrowing.

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I would ditch buying the last house. Shore up your finances. Take courses to learn how to be a good LL and learn to manage the properties. Make some mistakes. Let the properties (hopefully) gain value. Save a few quid. Set aside money for refurbishments. Do your first move out - find new tenant- move in to know how to do it.

To be a LL is not as easy as just buying and putting a tenant in the house. The lenders are right, you don’t have enough experience to be this exposed, no offence.

Just think, what would happen if you completed on the property, put a tenant in there who immediately stopped paying. Would you still have enough savings to pay mortgage/expenses for a year and solicitor’s fees? If not, then you are risking all to grow too quickly in a market where many LLs sell up as it isn’t what it used to be…

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It sounds as if your reasoning will fall on deaf ears. Many people think it is money for old rope. But some of us have been landlords for decades… We know the pitfalls

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Cheers guys. Many thanks for your responses.

Pull out of the deal, consolidate and move forward more cautiously. Your gearing is high as is your risk.

Hmmm, that’s interesting. Am speaking with another lender, we will see how it goes. Cheers

I have been really impressed with my broker, try Tony at Scales Porter’s. He has managed really good deals for me and friends sometimes in quite complicated circumstances.

He takes the time to really listen and persevere. Really well worth a try.

Cheers @Jennifer. Nice thought

Trying to make money on a shoestring by borrowing money and renting out property is not a good idea. You are unable to absorb the sudden expenses and will be unable to be generous to your tenants who are just trying to make a stable home.
The Government is very bad to landlords overall, in an effort to weed out rogue landlords and get the sympathy vote from tenants. Hope you can sort your problems but always be kind to your good tenants.

wow, brave. I always saved up for deposit before buying the next one and till now despite tenants paying regularly due to tax and renting out expenses felt it is not worth paying eg 500 pounds mortgage for a 1000 pound rental income. We now get hardly any mortgage interest deduction. So not wise to dive in like you r. Good luck

Many thanks for your comments everyone

It’s fine now actually. Went to NatWest and got at offer 2.13% which is cheaper than the previous ones.

Also I appealed the decision of the lender who initially refused me. The reasons they gave I think were silly. Anyway, the appeal was successful. I now have two offers.

Choosing between 1.98 and 2.13

I understand your thoughts on growing too quickly, I have taken note of it. This is the last of the cash anyways. Why keep your cash under the pillow when you can invest.

Am glad We got there in the end. Many thanks again for your thoughts

Those are very good bTL rates. I’ve got 2.25% on one property with a 40% equity.