Self-employed mechanic with adverse credit simultaneously remortgages his home and rental property to raise a deposit for a new home purchase
We were approached by a client – a part-time landlord and self-employed mechanic from Essex who was looking to purchase a new home – a four-bed flat in Essex.
The client did not want to sell his current home but needed to raise a deposit. To do this he had planned to remortgage his current home onto a buy to let mortgage and raise enough capital in the process.
Unfortunately for the client he was unable to raise enough money on just his home, so we suggested that he also remortgage his sole rental property to raise the remaining funds needed for the deposit. The client went away to think about his options and after discussing it with his accountant agreed that this would be the best way forward.
The number of lenders we were able to approach was limited because of the client's large outgoings and the fact that his credit profile showed a default for missing a mobile phone payment (although this had now been settled).
To overcome these issues, we approached a specialist lender which will overlook mobile phone defaults. We then had to evidence that the large outgoings were only short-term, as the client had been using a family savings club to save money to furnish his new home.
We put together a proposal for the client and after a bit of negotiation, the proposal the lender agreed to lend on all three properties. Here are the terms:
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Current home remortgage |
BTL property remortgage |
New home purchase |
|
Property value: £150,000 |
Property value: £195,000 |
Property value: £297,000 |
|
Loan amount: £117,818 |
Loan amount: £151,444 |
Loan amount: £217,940 |
|
LTV: 79% |
LTV: 78% |
LTV: 73% |
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Rate: 4.19% 2 year fixed |
Rate: 4.64% 2 year fixed |
Rate: 3.79% 2 year fixed |
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RTI: 125% @ 5.5% |
RTI: 125% @ 5.5% |
Term: 25 years capital & interest |
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Term: 25 years interest only |
Term: 25 years interest only |
Lender arrangement fee: £999 |
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Lender arrangement fee: £999 |
Lender arrangement fee: 2% (£3,028) |
Monthly payment: £1,130 pcm |
|
Monthly payment: £411 pcm |
Monthly payment: £586 pcm |
|
|
Rental income: £750 pcm |
Rental income: £950 pcm |
|
|
Gross yield: 6% pa |
Gross yield: 5.8% pa |
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Consultant: Gavin Richardson, 01732 471613
This is just one example of how we have helped secure finance for a client, if you have a similar scenario or something you'd like us to look at please get in contact with us on 0345 345 6788 or contact me directly at gavinr@mortgagesforbusiness.co.uk.
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
4th January 2017
