Client: A married couple, both in their 60s with three buy to let properties which they own personally. In addition to the rental income, both the husband and wife have state and private pensions, although in total, they earn less per year than the standard, minimum amount required by many mortgage lenders. Before approaching us, they had applied for a remortgage via another broker but had been declined.
Property: A three-bed semi-detached house in Peterborough which they let to sharing, working professionals. The property is not classed as an HMO.
Required Borrowing: As the couples’ original mortgage deal was about to end, they were keen to remortgage onto a new rate to avoid an increase in their monthly payments. Whilst they did not want to release any equity, they did need us to find a lender which could accommodate their age and annual income. In particular, they were looking for a 5-year fixed rate deal on 15-year terms, after which they planned to sell the property. They wanted 15 years in case they came up against problems trying to remortgage in five years’ time.
The Solution: We approached a specialist buy to let lender which can only be accessed by brokers. In principle, we knew this lender could help because it does not set a minimum annual income threshold and accepts borrowers up to 115 years at the end of the mortgage term.
To save the couple the stress of being turned down again, we double-checked that the couple met all the lender’s borrowing requirements and asked for the property valuation inspection to take place before the mortgage was underwritten. The lender was happy to proceed on this basis.
The valuation report confirmed that the property was good security for the mortgage and the application then proceeded as usual. A formal mortgage offer was issued two weeks later and the application is due to complete within the next month.
The new rate will save the couple £150 per month in mortgage payments. Here are the details:
Property value: £210,000
Loan amount: £168,000
Rate: 3.64% 5 year fixed
Term: 15 years interest only
Lender arrangement fee: 2% (£3,360) added to the loan amount
New mortgage payment: £519 pcm
Previous mortgage payment: £669 pcm
Rental income: £750 pcm
Gross yield: 4.29% pa
24th January 2018