Shortfall in LTV

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    Shortfall in LTV

    I let out 1 house which I used to live in and couldn't sell. I need to transfer my personal mortgage to a BTL. Repayments would reduce by £250 a month as Im on a high rate at present. The mortgage works and Birmingham and Midshire have both come back with an offer of a mortgage £13k less that what I need? Any advice from anyone in the same position? Method for perhaps borrowing the difference elsewhere?? Thanks

    #2
    You’re saying it’s a shortfall in the LTV but you don’t say what LTV the mortgage offer is based on. If they are only offering you for example a 60% LTV then you need to try and understand why they won’t increase the LTV, is it because the rental income you receive is below market value, is it because you don’t earn much money yourself?
    If they are offering a 75% LTV and you want to borrow more money than what a realistic 75% LTV equates to then you are probably overvaluing the property in your own mind which could explain why you couldn’t sell it.

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      #3
      I suspect that in both instances the valuation may have come from what is known as an automated valuation methodology (AVM) , unfortunately such systems invariably result in a valuation which is slightly below the perceived Open Market property valuation, unfortunately there is no facility for contesting such valuations.
      Lenders are choosing to use this system rather than undertaking a physical valuation by instructing their Appointed valuer to do the report given that due to Covid19 valuers are under extreme pressures to carry out physical valuations and are focusing their resources on the more complex types of BTL property such as HMO’s & MUFB’s.These alone are taking much longer to be reported upon.
      My suggestion is to ask your Appointed broker to find a lender who will obtain a Physical report but in all honesty the £13000 drop as indicated is relatively low so before spending money on a physical valuation check the reality of the figures particularly given the uncertainties surrounding the property market, also the rental calculation might also have an impact on the amount of loan being sought.

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        #4
        I’ve had a physical valuation from the mortgage company at 100k and they are offering £75k. I owe £88k so £13k short

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          #5
          They’ve also said rental valuation is fine

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            #6
            So it seems that that you are being offered a 75%LTV BTL mortgage on a property that was originally mortgaged on a residential mortgage higher than 75%LTV. I don’t see how you can do much about that other than continue on the current product at the higher rate and try to pay any spare money you have in to the property. Only other options I see are to take out a bank loan if possible and try to pay that loan money in to the property which could secure the BTL mortgage and then use your £250 monthly saving to pay off the bank loan but that’s getting a bit messy or sell your car if it’s worth anything, buy a cheaper car and put the excess in to the property.

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              #7
              Are you able to raise £13K from increasing the mortgage on your own home ?

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