Complex Buy to Let Mortgage for Foreign National Landlord
The Client: An experienced landlord with three flats in her own name, our client was looking to expand and diversify her buy to let portfolio.
The Property: A three-bedroom detached house in North London. In a prime location, the property had lots of potential for high rental yields, especially with the strong rental demand in the area and scope for future development.
The Client: Our client was looking for funding to help purchase the property into her new SPV limited company. She wanted a buy to let mortgage at around 70%, LTV with a competitive interest rate to maximise profits.
The Challenge: We faced three main challenges with this case. Firstly, our client was a foreign national, which would limit the lenders we could approach due to criteria restrictions. Many of the lenders we could consider have specific criteria around how long a foreign national had lived in the U.K, so we had to prove our client met the sufficient standards.
Secondly, our client had multiple deposit sources to purchase the property. With four different sources, our lender needed more documentation to verify the trail of funds for the purchase. This not only complicated the case on the administrative side, but it also meant that it would take longer to progress.
Another issue we faced was that the estimated rental value for the property did not meet the lender’s rental affordability calculations, putting our whole case at risk, as it was uncertain whether any lender would make an offer.
Lastly, the inconsistencies with the property in relation to our client’s wider portfolio raised some questions from our lender. Her current portfolio consisted of three flats in her personal name; however, she wanted to purchase this property into a new limited company. Previously our client had her case declined with a different broker because of this change in course and strategy. Many lenders wanted to see for definite who would be living in the property.
The Solution: Our dedication to our clients drives us to tackle every challenging case we face. That’s why we knew that with this case, the most important thing to our client was making sure that our lender understood what they were looking to do and why they wanted to do it in that way.
We were able to tackle the first challenge of our client being a foreign national easily, as we were able to prove our client’s permanent rights to reside and work within the U.K.
Similarly, we identified a lender that accepted a director’s loan. This resolved the issue of the multiple deposit sources, as we were able to show that the money was coming from our client’s personal savings, ISAs, and stocks and shares. Due to the number of sources, our client had to provide documents for up to six months prior to the case. This helped to prove to lenders that our client’s case was secure.
In order to resolve the challenge of the rental affordability calculations, we proved to the lender that our client’s discretionary income was enough to meet the funding requirements of the mortgage using top-slicing. Once evidenced was provided, the lender was happy to continue with the deal.
To reassure lenders over the differences in this purchase to the current properties in her portfolio, our client was happy to submit a signed testimony to confirm the change in strategy and the justifications and rationale for doing so.
Just three days before we exchanged, the vendor demanded £40,000 more for the property. Both our and our client’s experience meant that we could quickly provide the evidence to justify this increase in value to the lender. Property market growth and rental demand data was part of this evidence, and our client was able to make up the extra funds needed, meaning that the lender reoffered on the case within 24 hours of this price increase.
Through our thorough understanding of the case and our client, we secured a deal from a lender that satisfied our client’s needs. See the property details below: