MORTGAGE MAESTRO

Lycia Ltd is a Mortgage Broker with a difference. We have access to the Country’s largest broker network which allows us to offer a portfolio of products that are not available anywhere else. However our service isn't restricted to processing mortgage and insurance applications – we also develop long term relationships with our clients to help manager there finance and protection needs and make sure they always have the best products available.

As soon as your first mortgage is underway, a dedicated Finance Manager will be assigned to you, they will be available to you at all times. Our aim is to ensure that you have the correct level of cover in place to protect you, your family and your investments.

 At Lycia we have a unique approach.  Each client or prospective client has their own dedicated consultant; they will deal with all aspects of your property and deal directly with lenders, solicitors and insurers on your behalf to give you the best possible level of service.  They will relieve you of as much form filling as possible to make the process as smooth and efficient as possible.  Typically this means that we are able to take you to offer stage within ten working days.

The result is that as many as four out of five applications come from repeat business.  We forge long term relationships for the benefit of both our businesses and we really do go the extra mile to make things happen.

First time buyer

I am in the postion like most first time buyers, can't afford to save as i'm renting a flat.

My parents are spliting up. my mother wants to stay in there current house but cant aford to pay the mortgage/run the house.

I would like to move in with her and take on my fathers half of the mortgage.

Is there any mortgages out there that would help me.

A: Yes. We can do a ToE and bring him on to the mortgage. Depending on the setup of the current mortgage it may be in the client interest to stay with the current lender. However, a remortgage could also be put in place to fund the ToE. it is worth noting that Stamp Duty might be payable if the amount transferred is more than £125,000.

Relocating

When I had to move location due to getting a new job I decided to rent out my house. I have a residential mortgage. I didn't know i needed to let my lender know and i have rented it out for the last year and a alf. My lender has recently contacted me to say that they believe i am renting out the property. I have contacted them and told them i am and i didn't know i had to let them know. They have said they will increase the morgage rate by 2% if i do not return a completed application form to them but if i do and the rental agreement meets their requirements the interest rate will only be raised by 1%.
 
I am no longer in a fixed term with this mortgage provider but the rate at which they are charging me is extremely high. My house is in negative equity and i cannot change mortgage providers. I make no money on the house. My tenants pay £625 and i was paying my mortgage company £688 but this will rise to £1024 if they add the 2% which will be a rate of 7.99% on a variable mortgage.
 
I cannot afford to pay the difference. Are they within their rights to back date the 2% interest to the time the tenants moved in a year and a half ago?

A: This will depend on the mortgage contact, but is really a question for CAB or a solicitor

New options

I tried to sell the house some time ago but had no interest. On top of all of this i am now unemployed and using my savings to pay the mortgage difference. I cannot get any assistance from the housing authority as i am not living in the property. I cannot move back into the property as there are even less work prospects in that area than where i am now residing with family.
 
I tried to talk to the mortgage company about any other options etc but they were not interested in the slightest.
 
Any advice would be much appreciated.
 
A: I would apply for support with Mortgage payments from the government. Once you have been unemployed for 13 weeks you can make the application. They will pay the interest eleiment of your mortgage up to £200,000 of mortgage at a fixed rate of 6.09% (regardless of your actual pay rate).

With regard to the wider issues, I would again talk to CAB and see if they can help.

End of mortgage term

I had a buy to let property and the buy to let mortgage deal ran out right in the middle of the credit crunch when new buy to let deals didn't exist (or if they did, they were extremely unfavourable).  As I didn't have a mortgage on my own home, I decided to part re-mortgage my home and pay off the whole of the buy to let mortgage.  Now I need to do my tax return.  I am wondering whether I can claim that the interest and repayments on my home mortgage (which are clearly being paid by the tenants in the buy to let property) can be used to offset the tax that I have to pay on my income from the buy to let property?

I would be grateful to hear from you.

A: Yes. You can deduct any interest payments from a resedential mortgage where funds have been used for buy to let.

Change of mortgage

I have moved home through work relocation and have taken a mortgage with the Halifax, the house I have moved from also has a mortgage with the halifax. in the current climate I looked at the option of renting the property I left for a few years until the market picks up. I approached the halifax who informad me that I would have to switch mortgages on the property I wished to rent. (this was an expensive process and DOUBLED the payment). Can they force you do do this or is there another option ? very frustrating as I have been paying two mortgages for the last two years with the Halifax and they then drop this bombshell.

Advice much appreciated.

A: They can. Unless your mortgage contact gives you permission to let the property. It might be worth considering remortgage to a buy to let deal. rates start at 3.49% and we can take interest only to keep the payments low.

Vacant flat

I have a flat which I own outright and is empty i would like to release the equity out of it and rent it out and buy another and maybe do the same do i need to have a proof of income or with the rent be enough.I am 48 years old.

A: The rent will be enough!!!!! No proof of income is needed on most buy to let deals.

Change of mortgage?


I've recently married. Before I got married (and indeed now) I have my own residential mortgage on a property. My new husband has a mortgage on his residential property. Now that we are married, I live with him - the house and mortgage are all in his name.

I still have my property and would like to keep it as my parents would like to live there. Where do I stand with mortgages etc? Do I need to convert to buy to let? Or can I keep my residential mortgage? (I'm aware that I would need to amend the contents insurance.)

MM writes:
Firstly you will need to contact the mortgage providers for both properties as both your and your new husband’s personal circumstances have changed. With regards to your parents living in your property: this will depend on the conditions of your mortgage which will become clear when you contact your mortgage company.

The terms of most buy to let mortgages do not allow tenants to be family members. In addition, as part of the lending criteria, most buy to let mortgages require a rental calculation to justify the borrowing. This would entail you having to charge a full commercial market rate to your parents if they were to live in the house. Both of these factors indicate that a buy to let mortgage may not be appropriate.

His Will states: ‘The house to revert back to my sisters if it falls into disrepair, Miss Wilkins takes another partner, or does not use the house as her sole dwelling’.

At the time the Will was made June 1998, Miss Wilkinson was renting accommodation, however some time after this, she inherited some money from her family and purchased a three bedroomed flat. The flat has now been let.

Can you please advise if, with the purchase of the flat, the terms of the Will have changed?

What is the best method of raising cash on the house?

MM writes:
The matter of the Will is one on which you need to seek legal advice as this is not our area of expertise.

Raising cash on the asset of the house is a separate issue and is itself not simple. The lifetime tenancy infers significant rights to the tenant and makes the property difficult to mortgage or indeed sell. We have to assume you have had a conversation with the tenant and that they are not inclined to forgo their lifetime tenancy rights. If you have not then the obvious option, however difficult it may be, would be to open that discussion. You may find the tenant open to the offer of a financial incentive to vacate the premises, or you may find an investor willing to purchase the property at a lower than market value, however they will have the same difficulty raising the mortgage.

We would suggest you first investigate your legal options so that you know where you stand, then open the conversation with the tenant.

This means we will be left homeless for a while and want to find out if we could rent the property we are buying from the current owners for those couple of weeks between exchange and completion. Is this legal if we set up a short term tenancy agreement for these couple of weeks?

MM writes:
Whilst a short term tenancy agreement would be the simple answer for you, it poses a series of difficulties for the vendor, not least of which is that assuming the property is mortgaged, letting is probably against the existing lenders terms and they are unlikely to vary these as to do so would weaken their position of security. The period between exchange and completion is often a time of frustration, especially in cases like this where the property is vacant, however you will be able to find a removals company able to store your possessions and it’s a good time to take a holiday or to find out who your real friends are!

I have no experience on mortgage matters but would like to release cash from the rental property and use some of it for improvements to my own home, while putting a further £10k towards another buy to let property and also paying for improvements to first buy to let property.

My question is can claim all the interest on the loan as a tax deduction? And How easy would it be to get a buy to let mortgage for the £40k?

MM writes:
It is certainly possible to arrange a remortgage on the studio apartment. The amount of extra funds that can be raised will depend on the rental yield of the studio. Unfortunately you cannot claim interest on mortgage monies raised for improvements to your own residential property, however you can claim the interest on £10k used as deposit to purchase another BTL purchase and improvements to the first buy to let property.

MM writes:
Some lenders are happy to allow you to let out your property while still on a residential mortgage whilst others do not allow this. It is necessary to contact your lender for confirmation. It may change the rate of interest payable and there is normally an administration fee. If the property is let it will affect your buildings and contents insurance and the insurer will need to be notified.

Is this usual practise? I understand the £500 fee but why should we have to change from our previously agreed mortgage? Is there anything I can do to argue this? It doesn't seem the norm for other mortgage lenders.


MM writes:
The previous mortgage was agreed by the lender on a residential basis, the property is now being rented out and the lender is entitled to change the terms of the mortgage. Depending on whether an early.repayment charge is payable on the current mortgage, it maybe cost effective to remortgage with another lender that offers a free legals /valuation package.

If I make the cottage my principal place of residence (even though I won't actually live there), can I get a normal residential mortgage on it and still let it out as a holiday let? I'm having trouble finding a lender for a holiday let mortgage.


MM writes:
It would be breaking the mortgage conditions to let out the cottage without first obtaining the lender’s consent. You should seek a buy to let mortgage. The should not be a problem since you can borrow say 85 per cent LTV , self cert income, and no proof of rental income required – you just need to have 12 month’s residential mortgage history within last 10 years.

We currently have a fixed rate mortgage on the property in which we live, and have just got our mortgage offer to buy a second property so we can rent out the first. The lender will only release the money once our current property is on a buy-to-let mortgage, but we can't do this as we are on a fixed rate and will incur high charges to change.

Can they enforce this even though our current lender is happy for us to rent out?

MM writes:
It sounds as though the lender providing a mortgage offer for your new home is waiting for you to re-mortgage your current home onto a buy to let mortgage. Provided you have written confirmation from your current lender that they are happy for you to let the property, the new lender should be able to release the monies to your solicitor. Your broker/solicitor should contact your current lender to make sure this is the case and also forward the written confirmation of their 'permission to let' to them as evidence to support the fact that your current residential mortgage will be supported by the rental income – not your own salary.

Renting property on existing mortgage

I'm intending to rent my home for three years and rent elsewhere. Can I do this on my existing mortgage or do I need to get a buy to let mortgage? I do not intend to buy another home and I hope to return to my current house after three years. My mortgage is a base rate tracker with Skipton Building Society. I intend to change this to a fixed rate for three years before I begin renting the property.

MM writes:
You don’t HAVE to re-mortgage onto a buy to let mortgage, provided you contact your current lender and request that they give you 'permission to let'. They may charge you an annual fee for this so it’s worth checking with them. Although if you’re going to change your mortgage anyway, buy to let rates are so competitive these days that, if you know you’re going to rent the property for the next three years, you may want to consider re-mortgaging onto a buy to let product for a three year period.

Non-status mortgage

I am finding it difficult to provide all assurances needed for a buy to let mortgage. The LTV I want is quite high and I will need to show I have sufficient income to cover any shortfall in rent. I am earning sufficient money, but as a self employed jobbing builder I am finding it hard to provide all the assurances that have been asked for. I only went into business on my own last year and do not have any annual accounts as yet, for example. I have assets in the form of our family house. Am I likely to be able to get a non-status mortgage and what are the advantages and disadvantages of this?

MM writes:
You shouldn’t need to go down the non-status route – specialist buy to let lenders will appreciate the fact that the property should pay for itself by way of rental income. In addition, many specialist buy to let lenders do not require proof of your income.

Switching to fixed rate

I have a number of properties. Each one has a buy to let mortgage of between 60 per cent and 70 per cent of current market value. The longest mortgage has 12 years to run, the shortest 9 years. All have been in place for over 12 months and all are currently flexible rate mortgages.

Given the current interest rate climate I am wondering whether I should consider switching to fixed rate mortgages. As far as I know there will be no penalties to pay but there ill obviously be costs involved.

Can you give be some kind of rule of thumb as to whether or not it is worth switching – for example if I think interest rates might go up by another quarter percent and stay their for a year, is there likely to be a worthwhile gain in making the change?

MM writes:
Switching to a fixed rate is always a gamble against the market, however over 90 per cent of the mortgages we sell are fixed rates. Fixed rates offer both security against market fluctuations and the ability to budget outgoings with more certainty.

Fixed rates are based on the money market swaps, and therefore have potential future rate rises already priced in. There is no rule of thumb as to whether it’s worth switching as this will depend on your view of the market and your own personal circumstances.

I am looking for 80 per cent LTV but have a good income which, along with the rent I will get, means I will easily be able to repay both the buy to let mortgage and the largish mortgage on my own home.

MM writes:
Mortgage lenders do not take into account the fact that a property you are buying may be over 200 miles from where you live. The amount you can borrow is driven by the LTV and the rental income of the property, even your personal income is irrelevant in most cases.

MM writes:
LTV means Loan to Value. The value does not include buying costs such as legal and arrangement fees. Generally a lender will loan on the lower of value or purchase price.

A simple illustration is an 85 per cent LTV product will allow a maximum lending of £85,000 against a property purchased at £100,000.

MM writes:
It really does depend on the type of property and your personal circumstances. However, assuming the property is a standard property (not a flat above commercial premises or a former local authority owned high rise flat) and you have a clean credit history, then you can access leading market rates.

This means that of June 2007 an interest only mortgage for £125,000 (£225,000 - £100,000) would cost around £540 per month. For a repayment mortgage over five years the payments would be much higher – around £2,400 per month – although five years is considered to be a short time to repay the whole mortgage.

Would I actually be breaking any law with this plan, or is there a way around it?

MM writes:
If you are renting out a property on a residential mortgage, unless you have consent from the lender, you would be breaking the mortgage terms and conditions. It is also important to note that renting out a property in which you are supposed to be living may also invalidate your building insurance.

Buy to let mortgage rates are now so competitive that if you intend to rent the property out there is no financial benefit in choosing a residential mortgage.

MM writes:
You can let a property under a residential mortgage so long as you have the permission of the lender". However please make note of the answer to the above question regarding residential mortgages.

Student HMO

I have a six bedroom student rental property which I found hard to mortgage last year as almost everyone wanted the tenants on one agreement. The house has now been deemed an HMO as it is three stories. I have been granted an HMO license but I will need to re-mortgage soon. Do you know of anyone who will grant a mortgage for a six bed student HMO with all the tenants on separate tenancy agreements?

MM writes:
A good broker should be able to provide you with a buy to let mortgage for this type of property - the fact it is a six bed student HMO should not pose a problem.

How many tenants?

I wish to buy a house and live in it whilst renting some of the other rooms out to friends. I have been told that I can only rent to one lodger on a residential mortgage but if I finance the purchase with a buy to let mortgage I cannot live there myself. Is this true? If so is there a way I can do this type of thing?

MM writes:
No, to be frank this is not true. There are lenders who will lend on a residential basis and allow you to rent other rooms out to tenants. They will even take into account anticipated rental income when considering your mortgage application.

Mortgage to buy an investment property

We are considering buying an investment property as my husband's employer is struggling and we fear for his pension. We have used all our savings to reduce the mortgage on our home which means we have no cash but a lot of equity. As we essentially need to borrow 100 per cent of the investment property price, we want to raise a further advance on our main home. If we do it this way, we will have one mortgage but split into two accounts, the second will be easily identified as a loan to buy a second property.

However, will we be able to offset the interest charges against the income from the rent for tax purposes as it is not a buy to let mortgage on the investment property?

MM writes:
This income can be offset against both the interest elements of the mortgages, along with a number of other annual expenditures. You may generally claim tax relief on interest payments on a mortgage or loan taken out to fund the purchase or repair of a let irrespective of where the loan is tied too, as a mortgage is simply a loan attached to a property. Although only those expenses incurred ‘wholly and exclusively’ in generating income are allowable.

HMO finance

I have mortgages on two HMOs with Skipton Building Society. One property has six units (one self contained flat and five bedsits); the other has five self contained flats.

I now want to buy another HMO that has eight units (three self contained flats and five bedsits).

The problem is that Skipton has a rigid limit of six units per HMO.

Paragon will lend on a property with more than six units, but insists on three years’ experience as an HMO landlord. I shall only have one year when it's time for me to buy the eight unit property.

There are one or two other lenders that will lend on this type of property, but their LTVs are no good to me. I need 85 per cent ideally, but 80 per cent would just about be OK.

Can you suggest a suitable lender?

MM writes:
Unfortunately this is the situation with funding HMOs in the current market. I personally do not see why lenders are not rushing into this market as this is one of the few sectors where the rental yields still stay up. I can only presume it is through the widespread ignorance of the current legislation concerning HMOs.

Which type of mortgage

With my partner I am buying his parents’ house. It is worth £80,000 but we’re buying for £75,000 fully furnished with everything in it! The problem is before this opportunity arose we were planning on going next May to Tenerife for six to 12 months. We still want to do this.

If by some miracle we settle over there we will sell the house but realistically we will be back by May the following year. What is the best mortgage to go for? Can you rent out a property on a short term basis without having to change your mortgage to buy to let? It seems such a lot of work to do when we’ll only be travelling for 12 months tops.

MM writes:
I would suggest you make use of the £5,000 gift within the purchase price of the property. Some lenders will accept this gift allowing you to potentially purchase without any deposit whatsoever. How the lender treats or grants a consent to let is the question here. You will need to check this prior to drawdown of the mortgage. Some lenders will grant this concession, others will not.

Buy a partner out

I’m thinking of buying my former partner’s share of a house we both own in the Notts. As I will let the property out, this will mean changing to a buy to let mortgage. What would be the best way to go about arranging suitable finance?

MM writes:
It all depends on who the current lenders are at the moment, and whether you’re in a penalty period. It may not mean changing the mortgage over to another lender as your current lender may grant a consent to let along with the extra funds to buy your partner out. There are many variables here. I would suggest that you call one of our consultants who will be happy to provide the best advice for you.