Purchase of low-value, high-rise flat by landlord with adverse credit

We were approached by a broker looking for finance for a client – a part time landlord who wanted to expand her portfolio with the purchase of a new build one-bed flat priced at just £59,000.

The client’s borrowing profile and the actual property caused a few challenges when sourcing a lender because:

• The client has missed mortgage payments within the last 12 months – not many lenders accept applicants with adverse credit due to the higher risk

• Although in full time employment, earning more than £25,000 pa, she has been in the role less than the one year many lenders require.

• The price of the flat is below some lenders’ minimum threshold.

• The flat is in a 15-storey block so is classed as a high-rise – most lenders won’t lend on high-rise flats as they are harder to sell on.

Because the client’s credit profile is not good, there are no long term products on the market available to her; however, she does qualify for a three year term rate from Keystone’s Solutions Range.

In addition to helping her buy the flat, the product will help her to rebuild her credit profile as long as she experiences no further problems.

At the end of the three years, her profile may have improved sufficiently to remortgage onto a longer term rate.

Property value: £59,000

Loan amount: £44,625

LTV: 75%

Product: Keystone Solutions Range for Individuals

Rate: 7.99% 3 year fixed term

Term: 3 years interest only

Mortgage payment: £297 pcm

Lender arrangement fee: 3% (£1,770)

Rental income: £450 pcm

Gross yield: 9.2% pa