BTL Mortgage with Defaults

Posted on 2 July 2012 by Mary

My husband & I are strugglingto get a BTL mortgage at a good rate as we are showing 2 defaults - one for him and 1 for me. Both these were disputed accounts, it wasn't that we were having problems. Our main property is valued at £450000 and we are looking to borrow £128000. The best offer we got is 4.98% fixed for 2 yrs. The fee £1999 has to be paid upfront and we have to use their solicitor who is approx £400 higher than the local ones. Also I know some lenders don't charge a valuation fee. Do you think we can do better?

The defaults are certainly not helping your cause and if you have been approaching lenders on your own there is a good chance that you will be declined as soon as you mention they are showing on your credit record.  This is where an independent mortgage broker should be able to help you build a strong enough case for a lender to overlook the defaults and take a look at the actual risk of lending to you.

You state that the defaults are a result of a dispute and hopefully you have kept all the correspondence relating to this.  If you have an acceptable explanation with the documentary evidence a smaller bank or building society who does not rely on a credit score will look at these and then at the whole proposition put to them.  If you are looking to raise £128,000 on a property valued £450,000 and the anticipated rental supports a loan of this size I would be reasonably hopeful of being able to secure a better deal than you have now.

There is a balance between the mortgage interest rate, the application fee and any incentives offered by the lender, such as free valuation or free basic legal services.  Some of the current BTL products have fees as high as 3.5% of the purchase price/value and whilst they may also offer incentives such as a free valuation, you could be better off taking a mortgage a slightly higher rate with a smaller fee and no incentives.

I believe we can help you and that you would benefit from speaking to one of our independent mortgage advisers.  Please call 0344 346 3672 and tell the consultant the date and title of your question, they will then be able to help you find the right mortgage for your situation.


Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.

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