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I have a small property portfolio of 7 properties. 3 rented and 4 undergoing complete renovation work. Cashflow is poor at present to finish them off.

by smiler 14 March 2010 |

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My loan to value is 34% overall, however, I can not get buy to let mortgage to structure better. One point, I was late in paying one mortgage payment last August of 6 weeks, due to one tenant late in paying her rent.(4 financial advisers link to Lovemoney.com can not help due to late payment 6 months ago..
Anyone out there to advise me where I can get finance mortgage to help me out of this situation, so to help me smile again ?

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MikeGG1 posted
BTL mortgages tend to be on a property by property basis and each must have at least 25% equity. These are more suited to where no renovation/redevelopment is involved.
You have 7 properties at different stages and not enough of them are producing any income. You should concentrate available resources on whichever property could be income producing the soonest. Then you would have a higher income level to fund the next.
I think that you need to consult an accountant with experience in this field with a view to restructuring your business. It could be that you might be better setting up a Limited Company (Smiler Properties Ltd!!!!) and obtain business loans for that company.
Your late payment has not helped your situation. Is it shown as a late or non payment on your credit report? If shown as a non payment, you should get a correction issued.
The problem at the moment is that lenders are very nervous about BTL lending because there are more defaults on them than there are on residential mortgages, percentagewise.
Mike
Posted on 15 March 2010 | Love 0 loves Report
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manzanilla posted
You have taken on more work than you can finance. You are way over-extended. You should have an emergency fund that will cover a minimum of 3 months missing rent on one of your properties, so you don't default if a rent payment is late.
I can't see any lender is going to give you extra money in this climate. As Mike says, BTL mortgages are not meant for financing major works - if you had six rented out then you would probably be able to get away with doing one up, but your ration just won't work.
I suspect you are too over-extended for the limited company option to work either. Are all your mortgages at fixed rates? If so, when do they end? You sound as though you are probably very badly exposed to increasing mortgage rates.
I think you need to sell at least one of the properties rented with a large amount of equity and use that money to resolve the situation. And also sell one of the properties that needs renovation. You may makes losses on this one, but if you don't extricate yourself from your nasty situation rapidly, your whole property collection could collapse like a house of cards.
manzanilla
Posted on 15 March 2010 | Love 0 loves Report
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Swarbs posted
With a late payment on your record, you will struggle to get a BTL mortgage until the six months are up. Your best option in this case is to get a personal or secured loan from somewhere like Ocean Finance or First Direct. They specialise in lending to people who's credit is slightly impaired. You will pay higher interest rates, probably between 10-15% APR, but once your late payment has expired, you should be able to take out a BTL mortgage and pay off this loan. Zopa is another option, as they tend to be more flexible when you only have a single blemish on your credit report, and may be able to lend at lower rates. Just make sure that you can afford the repayments on the new loan you take out!
Also, some general advice, to succeed in BTL there are only two things you need to do:
1. Secure your cashflow. As manzanilla says, you should always be able to cover any rent shortfall or delays, and any emergency repairs / maintenance / refurbishments, out of your own cash in the bank. Don't rely on remortgaging: the mortgage markets can change in a day. Remember, the only way you will make a loss on a long term BTL investment is if you mess up your cashflow and are forced to sell when you don't want to.
2. Defend your credit rating with your life. Do not make even one payment late - as you have just found out, it can mess up your entire strategy. This is another reason why you should keep a sizeable emergency fund to cover any rental shortfall or delays - your tenants won't care about your credit record.
Posted on 15 March 2010 | Love 0 loves Report

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