Let to buy mortgage for landlord with poor credit
The client: A senior media professional who owns his own home and one investment property. Recently married and in search for a new home for himself and his wife, he has a small blip on credit profile due to wedding costs!
The property: A 2-bed flat in South West London which is the couple’s home. The husband bought the flat in 2014 for £370,000. A light refurbishment and rising property prices mean the flat has increased in value by £55,000.
The finance: Keen to keep hold of the property and rent it out, the client approached us for help to refinance it with a buy to let mortgage. He wanted to borrow £309,000 which would repay the existing loan, consolidate the wedding debts and raise capital to use as part of the deposit to buy their new home.
Most lenders would consider this case a “consumer buy to let transaction” because the client lives in the property he is looking to refinance. This would mean underwriting the application in the same way as a normal, regulated home-buyer mortgage. However, because he is also a landlord already, other lenders will accept this case on commercial terms and underwrite the loan on a buy to let basis.
In this instance, our client was more suited to the latter option and so we approached a specialist buy to let lender which accepts:
- Let to buy mortgage applications
- Debt reconsolidation
- Credit profile defaults
The application process: First of all, we asked to see the client’s credit report so that we could check that the lender would be a suitable match. This done, we collated the necessary paperwork to support a mortgage application – proof of identify, address and income, plus details of his investment property.
We submitted some basic details to the lender in order to get an Agreement in Principle. This was received within the day and so the client gave us the green light to proceed with the full mortgage application. A valuation was instructed, and the ensuing report confirmed that the flat would make good security for the loan.
The client then asked us to hang fire with the application as they were struggling to find a suitable onward property to buy as their new home.
We kept in touch and when the couple were ready to continue, we were ready to leap into action! We are now working to get them a home-owner mortgage too.
Both applications remain in progress and we’ll update you on how things go for the newlyweds in due course. In the meantime, here are the details of the buy to let mortgage: