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let to buy mortgage for client with complex income

Let to Buy Mortgage for Client with Complex Income Stream

21.01.20 | Written by: Ashley Jones

The Client: A self-employed homeowner with no previous landlord experience. He owned and ran a musical instrument retail and repair business just outside Greater London.

The Property: A 4-bedroom detached house on a modern development with excellent links to London and the midlands.

The Finance: The client needed to raise capital in order to purchase a semi-commercial property which would serve as both their business premises and residential home. To raise the money, the client wanted to remortgage their existing 4-bedroom property onto a let to buy mortgage and keep it as a buy to let investment.

The Challenge: The main challenge we had with this case was that the client had a complicated income stream. Not only was it received from a partnership and limited company, but it also comprised of a lot of significant, infrequent figures, due to the nature of the business. This made the accounts difficult to interpret and posed as a possible stumbling block for a lot of lenders, who would be worried that the client would not be able to cover any void periods.

The Solution: Although the clients’ business was very specialist, they had been running for over a decade with an exceedingly good accounts track record. We were able to highlight the stable business history and project the profits provided by their accountant to the lender, who was then happy to finance the let to buy mortgage. The lender subsequently released the equity the client needed to purchase their new semi-commercial property. Here are the details:

Property value: £875,000

Loan amount: £610,000

LTV: 70%

Rate: 3.79% 5-years fixed

Term: 25 years, interest-only

Mortgage payment:  £1,965 per calendar month

Lender arrangement fee: 2% (£12,200)

Rental income: £3,000 per calendar month

Gross yield: 4% per annum

Consultant: Ashley Jones, 01732 471694

 

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ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

NB: ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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