The Clients: With a portfolio of seven buy to let properties, our clients were both experienced landlords. Both had other sources of income besides property, with one applicant self-employed and the other with a PAYE salary.
The Property: A three-bed semi-detached house located in a residential area, let out to a single-family. With a standard construction and good location, lenders were likely to see this as a ‘vanilla’ property.
The Finance: Our clients were looking to remortgage their property onto a more competitive rate in order to save money across their portfolio. In the process, they were also looking to capital raise to fund a new investment property purchase.
The Challenge: While this may have appeared to be a straightforward case, there were still some challenges to navigate. Firstly, not all lenders are happy to offer to portfolio landlord clients, due to the added risk of a larger total borrowing across all properties. Secondly, some lenders do not allow remortgages with capital raises, even with details of an onward property purchase. Consequently, our available list of lenders was further reduced. Lastly, as our client is self-employed, we had to provide the lender with additional documentation. This included two years’ evidence of income, and a portfolio and mortgage statement. Requiring this extra information threatened to slow down our client’s application and involved a tougher underwriting process.
The Solution: With our experience on complex buy to let cases and whole-of-market access, we quickly able to identify a lender that would be happy to proceed with portfolio landlord clients and a capital raise. From our knowledge of the market, we also know that the preconception of difficulties with self-employed mortgage applications can be easily resolved by having the correct documentation on hand and a lender happy to work on these types of cases. As a result, we managed to get all the information required to the lender early on and got the case from the decision in principle to completion in just two weeks. This was also made easier by the free legal service that came with the mortgage product rate we sourced our client. See the property details below:
Property value: £390,000
Loan amount: £234,000
Rate: 1.57% for a five-year fixed term
Term: 25 years, interest-only
Mortgage payment: £310 per calendar month
Lender arrangement fee: £1,995
Rental income: £1,400 per calendar month
Gross yield: 4.3% per annum
1st April 2022