Can You Get It Wrong?
News on the street is that the estate agents are going to get flooded with repossessions. Banks are going to get tougher and they are going to force people out of their homes and kick out amateur landlords. I am not sure that this will be the case however all the data is pointing to this outcome.
It got me thinking. These banks who lent to the amateurs have learnt their lesson. Basically lend to people who can pay back the debt!
I asked myself how easy is it for someone to go and get a buy to let mortgage on a property? I have to admit it has been tough (especially for large landlords like me) but if you can actually get one then the hard work is done. Why? Well these banks do not want to make the same mistake as the last time.
So firstly they need to know that YOU are ok. So they will check out every detail to make sure that for whatever reason you will make sure that monthly payment comes in. How they determine this is their business but they will check you manage your financial affairs in the way a responsible person would.
Secondly they check that the PROPERTY is ok. So they need to make sure that if you do default they can either carry on collecting the rent which has to be in escess of the mortgage payment or sell it easily and quickly for more than they lent on it.
If you and the property pass their tests then chances say you will succeed just because the bank does not want to end up in the mess it got itself in to before.
I used to use surveys as my control mechanism. If a property surveyed up then that was good enough for me. I never needed to see the property, meet the neighbours or check out whether the garden was south facing! All I needed to know was that it valued up and it was suitable for lending purposes.
Now you have the added comfort that if a bank is going to lend on a certain property to you then you MUST be a good bet.
Article Courtesy of Ajay Ahuja
