The Client: A full-time NHS professional who owned one buy to let property. She was beginning to plan for her retirement and wanted to move back into her buy to let property.
The Property: A four-bedroom semi-detached house in a popular commuter town on the outskirts of North East London. Benefitting from the best of both worlds, the property was close to plenty of transport links and local amenities, but also green countryside.
The Finance: Our client’s buy to let mortgage term had come to an end, and the existing tenants had left. With a relatively small outstanding mortgage, she planned to move back in and pay off the remaining mortgage before she retired, meaning she’d be able to live in the property unencumbered during her retirement. However, in order to move in now, she would need to remortgage the property onto a standard residential mortgage, rather than a buy to let.
The Challenge: Some lenders are incredibly cautious about buy to let-to-residential remortgages, as they’re often concerned they’re not genuine and that the property will remain a buy to let. Obviously, this is not only a breach of the mortgage contract but increases the risk to the lender as it means the mortgage affordability is not calculated correctly for the properties’ use. Furthermore, this case opened in Autumn 2020, when lenders had already increased due diligence on all applications as so many people were in financial difficulty. Therefore, to successfully secure this remortgage, we would have to reassure the lender that the deal was genuine and that our client was financially stable.
The Solution: After identifying a lender with competitive residential rates, we contacted the Lending Manager to discuss the case. During this conversation, we were able to evidence to the lender that our client was planning for her retirement, and that as an NHS employee was financially stable and therefore, low risk.
Satisfied with our evidence, we were able to submit a mortgage application for our client, who received a formal mortgage offer just three days later! Three days for a mortgage offer is quick under most circumstances but has been almost unheard of since the pandemic due to the high volume of applications lenders have had to process and the impact on service times. Needless to say, the client was thrilled. Here are the details:
Property value: £400,000
Loan amount: £133,000
Rate: 1.44%, fixed for five years
Term: 11 Years, capital and interest
Mortgage payment: £1098.24 per calendar month
Lender arrangement fee: £995
Consultant: Ashley Jones, 01732 471694
9th December 2020