Our clients, a brother and sister, approached us seeking finance to get onto the property ladder by purchasing their mother’s home. Their mother had been struggling financially and wanted to sell up and move in with her partner. She was prepared to sell her home to her children for less than it was worth. The difference between the purchase price and the property value would be used as the gifted deposit. This is known by lenders as a concessionary purchase.
The sister is in full-time, permanent employment and the brother works as a contractor as part of the Construction Industry Scheme (CIS).
Unfortunately, the brother’s credit profile also shows a four-year old missed credit card payment.
Initially, the siblings had contacted another broker, but because the circumstances were quite complex the broker suggested they use Mortgages for Business because we have more experience in finding solutions for unusual cases. The broker felt that if we couldn’t help, the siblings’ only chance of a mortgage might be from a specialist, more expensive provider.
We approached a high street bank for an initial discussion and to get an Agreement in Principle because we knew that the bank is both comfortable with concessionary purchases and knows how to underwrite applications from CIS workers. Further, although the bank does take credit history into account, it uses an internal credit scoring system and we knew that a single credit card default would not be enough for the brother to fail this check.
An AIP was promptly issued and so we submitted an full mortgage application on behalf of the clients. The bank issued a formal mortgage offer within three weeks and the transaction completed without problem a couple of months later. The clients were delighted to have secured a competitive fixed rate which would protect them against interest rate rises for the next five years.
Property value: £270,000
Loan amount: £175,500
Rate: 2.02% fixed for 5 years
Term: 30 years capital and interest
Mortgage payment: £654 pcm
Lender arrangement fee: £999 added to the loan
Consultant: Charlie London, 01732 471604
If you're looking to make a similar purchase and need help with finance, you can call me on the number above or feel free to use the main hotline: 0345 345 6788.
24th October 2017