Home News Mortgage clinic: ‘We want to sell but buyers can’t get a mortgage’

Mortgage clinic: ‘We want to sell but buyers can’t get a mortgage’

by admin
0 comment
W.

Iriam Perry, 33, is a project manager who lives with his partner and newborn son in Woolwich. He purchased the apartment in his new construction in 2017 and planned to sell it last April.

“Like many on our block, we reached the end of the process when the buyer’s attorney discovered that the lender was not happy with the lender. land rent It’s updated every five years,” he says.

Rent is £400 a year and will increase in line with inflation, currently around 10%. This means it will rise to £440 in the next five years.

“Lenders are now hesitant to finance properties with five-year rent renewals because buyers have to pay for this and higher interest rates,” says Perry. Despite the small rent increase, we found Barclays to be the only lender we were happy with for this property.

detail

  • Price paid in 2017: £435,000
  • 2 year fixed mortgage rate: 1.27%
  • Monthly repayment: £787
  • Mortgage Balance: £266,000
  • Annual rent: £400

“We have spoken with freeholders and they have refused to help and their feedback is that there are many lenders willing to lend in five years. [renewals]’ he says. “He was right five years ago, but not now.”

Perry’s mortgage was in Halifax, and the rent wasn’t an issue when he bought it.degree of interest It wasn’t where they are now.

He had planned to port his current mortgage with a fixed low interest rate and a 3.09% add-on mortgage until January 2024, but the buyer pulled out and he lost his subsequent purchases. rice field.

“Our mortgage offer expires on December 31st, so we don’t currently have enough time to find and complete a new property, given we lost our purchase. It’s incredibly frustrating and upsetting to think about being stuck in a house that doesn’t sell and doesn’t sell.”

advice

Anderson Harris Director Adrian Anderson

Mortgage lenders regularly change their lending standards, so what was accepted when William bought the property may not be acceptable now. Those considering selling or re-mortgaging their new apartment may find that lenders are now reluctant to consider renting. The problem for the bank is that if the rent is reviewed every five years (usually in line with inflation/RPI), there is no upper limit to the rent increase. Therefore, it is difficult to predict what future rents will be, leaving the possibility of significant price increases, making the property less attractive as mortgage collateral.

Most lenders require rent renewals every 10 years or more, but Barclays appears to be bucking the trend, with major high street/retail lenders considering a five-year review There are some other exceptions as well. Smaller building associations and challenger lenders can consider applications. These may come with a higher rate, or have other conditions imposed, such as restrictions on the geographic location from which they are rented, or only considering apartments on certain floors. I have.

In William’s particular case, he needs to be candid with potential buyers to ensure there are no last-minute surprises again. You should approach an independent mortgage broker who can approach either Challenger Banks, or the Building Society.

Jane King in Ash Ridge Private Finance

Rent reviews are conducted every five years and cannot be changed without the consent of the freeholders. The terms may be changed by the freeholders if they agree. Alternatively, a Deed of Change may serve as an alternative.

If this doesn’t seem likely, William could suggest that his realtors direct potential buyers to specific lenders such as Barclays if they need a mortgage. There are a significant number of lenders that will finance properties with rising rents, as long as they are associated with a fixed index (such as RPI) and are reasonable. It depends on the evaluator’s comments, which the lender bases its lending decision on. The Principality Building Society and the Coventry Building Society are he two examples of lenders that might do this.

William should seek help from an independent advisor who can chat with the underwriter before applying. He may also be able to sell to cash buyers where rent issues are not an issue.

You should seek independent advice from a qualified professional before acting on any information contained in this article.

You may also like