Buy to Let Mortgages with CCJ
Buy to Let Mortgages with CCJ
Finding a buy to let mortgage can be difficult at the best of times, and the process is made no easier if you have adverse credit or a CCJ registered against you. However, as the buy to let property market continues to develop, more and more lenders are beginning to consider approving investors with CCJs; this means obtaining a buy to let mortgage with a CCJ is not as difficult as it’s once been!
As buy to let mortgages are not handed out by all lenders to investors with CCJs, the best chances you have at securing your ideal buy to let mortgage is to know where to look and to gain expert advice.
Can I get a buy to let mortgage despite having a CCJ?
When looking for a buy to let mortgage, you’re likely to experience different requirements and criteria that affect your eligibility wherever you go, which is why it is important to know where to look. Here are some of the typical factors that lenders might look at when reviewing your application.
- Date of CCJ – How recently the CCJ was registered against you is likely to be the most crucial factor affecting whether you get approved. If the CCJ was registered less than 12 months ago, it’s likely to be considerably harder to obtain a buy to let mortgage, unless a substantial deposit is put down.
- Size of CCJ – The amount on the CCJ is also likely to be taken into consideration by lenders, as most specialist lenders limit it to a certain level if the CCJ was recently registered and a large size.
- The size of deposit –If you are able to put down a considerable deposit for the property, your application is likely to be greatly strengthened.
- Number of CCJs – Many lenders limit the amount of CCJs that the borrower can have to 2 in the last 24 months.
Whilst lenders are likely to review these factors when making the decision whether to grant you a buy to lent mortgage, there are also other aspects of your personal circumstance that they are likely to take into consideration. Lenders will likely consider the following:
Rental Coverage Ratio: Lenders require landlords to have a rental coverage ratio of at least 145% for standard buy to lets and 170% for houses in multiple occupation. It should be noted that landlords cannot just raise the rent that they intend to charge, as lenders will require a professional surveyor's valuation to be the basis of the rental coverage ratio.
Income Stress Test: Lenders will scrutinise landlords' income more than ever before. Lenders will implement an income stress test to check whether the landlord can afford mortgage repayments. To satisfy the lenders' income stress test, landlords will have to demonstrate that they can afford mortgage repayments in the event that the interest rate hits 5.5%.
Review of Portfolio: Lenders will now require an in-depth review of the landlord's entire portfolio. This is because lenders will no longer provide buy to let mortgages to landlords if they have one or more properties that are not profitable. As a result, landlords can no longer spread equity across their property portfolio to assist a property that does not provide a positive return.
To maxmimise the chances of securing a buy to let mortgage, we recommend that you also contact an independent financial adviser or a mortgage broker, who can analyse your situation and help you find the right deal for you.
To find out how Fair Mortgages could help you get a buy to let mortgage with a CCJ, fill in the online contact form on this page to request a call back, at a time that suits you. Alternatively you can call directly on 0117 403 4222.