Looking to expand their buy to let portfolio, our client wanted to release capital from their existing home for a new investment purchase.
The Client:
An experienced landlord with four buy to lets in his portfolio. Currently working as a contractor, our client has been a landlord since 2000.
The Property:
A converted, two-bedroom ground-floor flat in North London. Ideally situated for commuting, this was our client’s long-term home.
The Finance:
Our client was hoping to remortgage their residential property to raise capital for a deposit to fund a further buy to let purchase and expand their portfolio.
The Challenge:
The primary challenge with this case was our client’s income. Working as a day rate contractor meant we could not provide the lender with a precise annual income amount for them to run affordability checks on.
Our client’s income consisted of day rate charges and the rental income from his property portfolio, so we had to prove that this would be sufficient to cover the mortgage repayments and a reliable source of income.
Our second challenge with this case was that our client was seeking an interest-only mortgage. Many lenders will be wary about this option on residential property and want to see a clear repayment vehicle in place at the time of the application. Knowing how the client intends to repay the loan in full at this application stage will help to reassure lenders of the validity of the case.
The Solution:
When it came to getting this case through to completion, we had to provide our lender with sufficient evidence of the application’s stability.
Firstly, we demonstrated our client’s experience in his profession; he’d worked as a day rate contractor for over five years. We also showed the lender that, despite having changed companies since starting out, there were no breaks between contracts, demonstrating that our client had a continuous and consistent income stream. This is an essential part of lender criteria for contractors and helped to reassure our lender.
Then, we were able to provide our lender with the details of our client’s existing portfolio and the buy to let property our client intended to sell at the end of the full mortgage term to repay this loan. With this information provided and clear, the lender was happy to proceed. As such, we were able to secure our client a highly competitive rate given current market conditions.
Property Details:
Property value: £415,000
Loan amount: £290,500
LTV: 70%
Rate: 2.69%, fixed for five years
Term: 13 years, interest-only
Mortgage payment: £655.72 per calendar month
Lender arrangement fee: £1,995
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