BTL Remortgage Declined
Remortgaging a buy-to-let property can be a surprisingly simple yet affordable way of raising funds for almost any project or purpose. That said, refinancing a buy-to-let property is not the same as remortgaging the home you live in.
As a buy-to-let property is technically a business investment, it is viewed somewhat differently by most banks and lenders. The fact that the applicant may already have an extensive portfolio of properties and loan products may factor into their eligibility checks.
Reasons for Buy-to-Let Refinance Refusal
Application rejections are always disappointing, though can always be attributed to one or more important issues. As with most mortgages and refinance deals, general ‘stress tests’ and background checks will be performed on landlords looking to refinance buy-to-let properties.
Examples of which include credit history tests, assessment of current debts and outgoings, income and affordability checks, total combined equity owned and so on. Should one or more of these checks return a ‘negative’ result, it is unlikely the respective application will be accepted.
Alongside these more typical grounds for rejection, there are also several surprisingly common issues that can stand in the way of a buy-to-let refinance application. Mainstream banks and lenders are scrutinising buy-to-let remortgage applicants where one or more of the following apply:
1) Buy-to-Let Properties with Flat Roofs
This is by no means guaranteed grounds for refusal, but can nonetheless make it more difficult to qualify for a competitive refinance deal. Irrespective of the quality or structural integrity of the property, flat roofs are considered higher-risk than more ‘conventional’ roofs and often require more maintenance. It is therefore assumed by many lenders that flat roofs can make properties more difficult to sell out, which is why they can show reluctance to lend against them.
Where all types of nonstandard properties and property configurations are concerned, it is essential to consult with an independent broker if considering refinancing.
2) Late-Night Businesses and Premises Nearby
The most obvious examples to illustrate this point would be bars, pubs and nightclubs in close proximity to the property in question. Properties positioned too closely to late-night businesses and certain types of premises could be considered difficult properties to sell, given the disruption a nuisance caused by their neighbouring properties. If there is a chance that late-night revellers could keep the occupants of the property awake, a lender may consider it a high-risk property to lend against.
The same may also apply (though to a lesser extent) to properties located near busy railways or directly under flight paths.
3) Undesirable Odours
Another factor taken into account by many refinance specialists is the presence of restaurants, cafes and takeaways in close proximity to the property in question. Taking into account the preferences and potential objections of future buyers, any buy-to-let property exposed to undesirable odours of any kind may be considered to have diminished future sales potential. The most obvious examples of which being flats located directly above or adjacent to chips shops, kebab shops, curry houses and so on.
Even if you have no objections to these kinds of fragrances personally, they may be considered an issue by your lender.
4) Japanese Knotweed
This problematic plant continues to represent a thorn of thousands of property owners across the UK. In almost all instances, mainstream residential mortgage lenders will immediately close their doors where the word ‘knotweed’ comes into the equation. The presence of knotweed isn’t something that can (or should) be covered up, as to do so could land you in serious trouble at a later date.
If you suspect one or more of your properties may be affected by Japanese knotweed, it is essential to organise its destruction and removal at the earliest possible stage. Otherwise, you may find it difficult to refinance the property in question and impossible to sell it at a later date.
5) Lease Coming to an End
Another factor considered grounds for refusal by many lenders is when the applicant’s lease on their property is coming to an end. As a general rule of thumb (though not always the case), any buy-to-let property with less than 70 years remaining on its lease could be extremely difficult to refinance or sell. This is because it is considered to be a depreciating asset, which could present future complications as the lease draws closer to its conclusion.
Issues surrounding lease expiration can be complex to address, which is why it is important to take action at the earliest possible stage.
Consult with an Independent Broker
Whether you are seeking clarification with a rejected application or simply looking to ensure you get the best possible refinance deal, consulting with an independent broker is the way to go.
Irrespective of your requirements and the extent of your property portfolio, an experienced broker can help you understand the available options and get the best possible deal from a specialist lender.