How to fast-track approval of buy-to-let mortgages
- 23rd November 2011
- Property Tips
How to avoid delays, like discrepancies in proof of income and failing the bank’s residency requirements.
Although more lenders are returning to the buy-to-let market, lending criteria are stricter than they were before the credit crunch. Landlords looking to expand their portfolios for the first time since then might be surprised at how much things have changed.
Here are some tips from ludlowthompson Mortgages on how to avoid unnecessary delays.
Proof of income
Sometimes a small discrepancy between the rental income stated by an investor on their mortgage application form and on their SA302 statement of tax return can create problems.
Stephen Ludlow, Chairman of ludlowthompson, explains: “A landlord's reinvested income may not be presented on their tax statement as income so it looks lower than they stated to the bank on their application form. When a new lender sees there is a discrepancy, that acts as a red flag and can cause delays while it is clarified.”
It is important that the valuation submitted by the investor is as close as possible to the mortgage company’s final valuation report. Previously, lenders would be flexible but now if there is even a relatively small difference in the property value given by the investor in their estimate they can sometimes reject the application.
Stephen Ludlow says: “Professional investors get a feel for how much a property is worth, but it is important to back that up with desk research. The best thing to do is to look at the completion price on similar properties that have been sold in the area recently."
Proof of ID and residency
Banks require a lot more evidence for identification and residency purposes than they used to. Self-employed investors have always been asked for three months’ bank statements for their business but now they will also often be asked for similar statements for their personal bank accounts.
Other frequent requests include providing the mortgage statements and assured shorthold tenancy agreements for any existing buy-to-let investments.
Stephen Ludlow adds: “ludlowthompson Mortgages provide a full service to help landlords apply for mortgages, which prevents many of the common problems that can cause delay. However, some foreign banks prefer to deal directly with investors and in these cases in particular it is important to take great care with the application and supporting information.”
A landlord's reinvested income may not be presented on their tax statement as income.
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