When to say ‘No’
THE QUESTION
I’ve had an offer on a flat/bedsit accepted. The estate agents floor plan shows the total floor space as 26.8m2. Will this be a problem when I apply for a BTL mortgage? Am I right in thinking lenders have a minimum 30m2 minimum figure?
The other option is to decorate throughout and sell it on. Are residential mortgages easier to acquire on flats this size making re-sale a safer exit strategy?
THE ANSWER
The size of this property means limited mortgageability and limited marketability.
No one really wants to live in a rabbit hutch this size. Those that do are usually interested only because of financial constraints and their inability to afford anything bigger. As soon as that changes, they are off as fast as they can whether they’re a tenant or an owner.
Tenants won’t stay long and if you are using an agent to find tenants, their recurring fees to find new tenants will undermine the yield.
Finding a potential buyer is scraping the bottom of the barrel, regardless of how well presented it is.
Mortgage lenders recognize this and many of them decline to lend on sub 30m2 - as it’s too much hassle trying to flog it on if they need to repossess it.
Take heed from their considered view and find something with wider market appeal to sink your money in, short or long term.
You can learn more here:
- Contact Kevin Wright over on his Facebook page.
- Browse the Recycle Your Cash online training library by clicking here.
- Attend an upcoming 1-Day Property Finance Masterclass event - Book in here.
