all about mortgage

• Home
• PRIVACY POLICY

Mortgage Blog

6 Responses

Subscribe to comments via RSS

1. Written by Graham N
   on September 27, 2009 at 7:13 pm
   Permalink

   Self certs are perfectly legal, just rather hard to come by at the minute unless you only need a fairly low percentage. If you have properties that you rent out look at re-mortgaging them. That might give you the extra equity that you would need.
   If you get a self cert watch out for higher rates and be extra careful about early redemption clauses. I got bitten by a 6% fee for selling my house within 10 years!! Especially as I asked for a settlement figure and they gave it me without the fee then hit me with the charge as we were about to exchange contracts.

2. Written by omegahpl
   on September 27, 2009 at 7:13 pm
   Permalink

   Any lender is going to ask all about your income and all the details right now, things are much tighter than they have been.
   Are you talking about an owner carry contract? That is quite legal and you do want to be careful that you are represented because they don’t have to follow the regs other lenders do. What certification would they need they could certify themselves? Does not compute.
   Allowing the selling party to know everything you have inside and out … well that’s not the best stratagy, you’re right on that one.
   Any decent lender will use your tax returns as income for the past 2 years and usually average that and call that your income amount for qualification.
   If you don’t like what they are doing go to another lender and shop their terms around. It doesn’t sound like you have a done deal yet unless you really signed your life away, in which case … awwww crap …
   Good Luck
   Edit: Grahm obviously knows his stuff on your type of situation and has been through it lately, I’d listen to him well.
   Good call on the refinancing the other rentals Grahm, that slipped by me.

3. Written by Lesley
   on September 27, 2009 at 7:13 pm
   Permalink

   Do you mean self certified as in self reporting income? Yes it’s legal, but mortgage companies are now more hesitant about approving them due to the mortgage collapse. Additionally the terms of the loan are not as favorable when you self certify, you will have a higher interest rate to protect against the possibility that you aren’t being honest about your income.

4. Written by Dale H
   on September 27, 2009 at 7:13 pm
   Permalink

   I am not sure what you mean by a self certified mortgage. Are you talking about a stated income loan? If so, they are harder to come by these days.
   I don’t know why the lender would not consider rental income as extra income unless your tax returns do not reflect “income”, but a loss.
   I don’t know where you are located, but full doc loans are the only thing that is really good for the most part here in Ohio.
   Good luck working out the details.

5. Written by Ape -X-
   on September 27, 2009 at 7:13 pm
   Permalink

   Yeah its pathetic isn’t it like a Job these days is more secure income than property rentals..

6. Written by mark_har
   on September 27, 2009 at 7:13 pm
   Permalink

   From the fact that this is appearing in Yahoo answers UK, and you’re talking about an “estate agency” rather than a “realtor”, I’m assuming that this is a UK question.
   The short answer: Yes – they are legal, but a lot less common than they used to be.
   The long answer: There are two separate issues going on.
   - Firstly, can you self-cert a lot of the figures you’re reporting
   - Secondly, how is rental income treated when calculating the maximum they will advance
   On the first, there aren’t many lenders left who will let you self-certify – a lot of the “toxic loans” that were made (and while there weren’t anything like as many in the UK as there were in the USA, there were still a big bunch) were to people to wanted to self-certify. Hence, many lenders have stopped accepting them. You need to find a broker who specialises in investor mortgages to sort this out.
   On the second, it’s not clear from your question whether you are looking to buy another BTL property, or this is for your main house (PPR).
   If it’s for another BTL, then things are fairly straightforward to work out – UK lenders calculate two figures and take the LOWER:
   1: A maximum loan to value based on the purchase price of the property (or the valuation if you are re-mortgaging.)
   — Typically, about 85%, so a £100,000 property would give up to £85,000 mortgage, but read on.
   2: Whatever loan means that the rent will cover a percentage of the interest – typically about 130%… so that the rent pays the mortgage AND other costs.
   — If the rent was £400 per month, and the interest rate 6.0%, you have to work back. You divide £400 by 1.30 (130%), to give £307.69 per month, or £3692.30 per year. This is the most interest that you’ll be assumed to be able to pay.
   — Then you divide this figure by the 6% interest rate, to get a maximum mortgage of £61,538.
   This £61,538 is the LOWER figure, so this is what the lender will lend you.
   For BTL mortgages, many lenders ADDITIONALLY have a “minimum qualification income” figure – typically about £20,000 that you have to show you earn. This must be earned OUTSIDE of your property business. Not quite sure why they demand this. If you are a “full time landlord”, then clearly THESE lenders won’t touch you – so you need a broker who understands this and only puts you through to lenders who will lend to full-time landlords.
   If you are looking to buy / refinance YOUR OWN HOME, then this will typically be very HARD to finance based on rent income from other properties… to the extent that I don’t know any lenders who do it A question, again, to put to a specialist broker.

Subscribe to comments via RSS