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Rental income down valuations affecting

buy-to-let mortgage applications

Buy-To-Let Mortgages Refused As Surveyors Down Value Rental Income

Buy-To-Let Mortgages Refused As Surveyors Down Value Rental Income

Approvals for buy-to-let mortgages are failing because surveyors are ‘down valuing’ the expected rental income from the private rented sector and are advising mortgage lenders accordingly.

In some cases, surveyors are even down valuing the value of rent already being received by landlords.

The claims were made last weekend in a Sunday Times feature, which says that some buy to let mortgage lenders are rejecting landlords’ rental estimates.

Most buy to let mortgage lenders want to see monthly mortgage repayments covered by rent with a 25% excess, to cover expenditure and void periods. Some lenders want to see 130% of rental cover, while others are happy with 100%.

Down valuation of the potential rental income could result in the refusal of the buy to let mortgage application, or lenders may limit the amount they will offer, often below the borrower’s expectations.

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UK mortgage lending saw an increase in activity during July 2012.

UK Mortgage Lending Increases in July

UK Mortgage Lending Increases in July

The Council of Mortgage Lenders (CML) have stated that gross mortgage lending in July increased by 8% to £12.7 Billion (GBP), from £11.7 Billion (GBP) in June 2012 and is 2% higher than the total of £12.5 Billion (GBP) in July 2011. The figures include private residential property purchases and Buy-To-Let mortgages for rental property.

Caroline Purdey, CML market and data analyst, commented: “Gross mortgage lending showed an 8% increase from last month, continuing the see-saw pattern seen throughout this year, albeit against a broadly flat market. Interpretation of recent trends continues to be challenged by one-off effects. We look forward to the September figures when the distorting effects of the Diamond Jubilee and the Olympics should largely have worked their way through.”

Mortgage lending levels appear to be slowly recovering, and there are a multitude of products on offer to borrowers, albeit with lower Loan To Value (LTV) rates and higher deposits required, however any real recovery in lending is still a long way off. offer property investors and landlords useful information for choosing the right mortgage broker for you. Please see below for an excerpt and follow the link at the bottom of the post to read more


Which Type Of BROKER Is Right For You?
BROKERS help you through the minefield of mortgages whether you need a buy to let product, have bad credit, need a self certification mortgage, are a first time buyer or simply need mortgage advice. Their job is to basically find the best mortgage deal and mortgage rate for their clients needs, complete all paperwork and manage the application through to completion of the deal.


The mortgage maze can be a difficult one to navigate and seeking unbiased mortgage advice is often the easiest way to understand the options available.

There is more than one way of classifying BROKERS. The Financial Services Authority (FSA) list various classes of BROKER dependant upon independence and fee structure. These definitions are currently under review as part of the FSA’s Retail Distribution Review (RDR) and will be updated if there are any changes.

  • Mortgage IFAs (independent financial advisers) who have access to the whole of mortgages on the market (as well as other areas of financial advice) and give you the choice of paying by fee if you prefer
  • Independent Mortgage Advisers who offer products from the whole of the market as well as giving you the choice of paying by fee
  • Mortgage Brokers who offer products from the whole mortgage market but are paid via a commission

It is probably more important from an Investors point of view to choose their BROKER based on the amount of suitable products offered.

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Directory Listings for Mortgage Service Providers

Property investors are being advised to consider fixing their mortgage rates now, as five-year rates fell to their lowest level in history – and mortgage brokers said they are unlikely to get any cheaper.

It follows a flurry of rate-cutting by banks and building societies, resulting in ten lenders now offering five-year fixed rates below 4%.

Brokers are already reporting a surge in the number of borrowers looking to remortgage from their lender’s standard variable rate.

Rates are not expected to fall further, though, as lenders have little scope for further cuts. Five-year swap rates – the rates that banks use when lending to each other and pricing their mortgages – have now fallen to 2.2%, but lenders still need to make a profit on the rate, and repair their balance sheets.

Borrowers with large mortgages have even paid heavy redemption penalties on existing fixed-rate deals in order to switch to the new lower fixed rates.

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