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The 6-month restriction

buy to let Jan 05, 2017

THE QUESTION

Do you know any lenders who are willing to lend straight away? I’ve been trying to purchase a second property and they all say I have to wait six months before I can take out a BTL mortgage.

THE ANSWER

If you have bought a property for cash and are now seeking a mortgage to recycle your cash into your next deal, almost every BTL lender will impose a 6 month ownership restriction before they will accept an application for a remortgage.

You may wonder why; it’s because they have an objective which is diametrically opposed to yours.  You want to get your cash out, they want you to keep it in, as they see you taking your cash out as a threat to the security of their money sitting in your property.

If you want access to the full range of BTL mortgages and the low rates that they offer, you have to wait 6 months and there is no other way to achieve access to them.

A very limited number of BTL lenders will accept remortgage applications within the first 6 months in certain circumstances.  However, if you expect them to roll over and let you take all your cash out you will be disappointed; they won’t.  They will lend against the purchase price you paid and may also lend against the cost of any improvements made since purchase, rather than the full market value of the property.

If you don’t want to wait six months you can choose commercial lenders, who will accept applications at any time. However, they charge higher rates; although with increased flexibility over lending criteria in some aspects, but higher benchmark entry points in other areas.

So your choice really, is wait six months for the best rates and accept higher rates for refinancing faster.

You do have one other option if you decide you want to wait six months to get access to the best deals and that is to use bridging finance to leverage cash out of your current property (assuming you paid cash for it).  Bridging allows you to operate as a cash buyer, negotiate hard, complete fast, buy cheaper.

You can learn more here:

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