Sometimes, residential mortgages can blur into one with lenders offering similar rates and borrower criteria. We are excited to share with you a lender who is offering something entirely different for those mortgaging their own home.
Market Leading Income Multiples
The market standard for income multiple calculations on residential mortgages is 4.5x; however, this lender offers borrowing up to 4.75x your income as standard and up to 90% Loan to Value (LTV). While a few other lenders will offer more (some even 5x), it would usually require an individual or combined income of £50,000. What makes this lender different is that it only requires £40,000; a huge advantage for those on lower incomes, especially in the current climate where average house price increases are outstripping any increase in average wages.
Minimum Income Requirements for Contractors
The standard income multiple calculation for contractual workers is 46 weeks x Day Rate x 5, and the majority of lenders require a minimum annual income of £75,000, evidenced with at least 12 months of completed contract agreements and six months onwards contracts secured.
In order to cater for those on lower wages, this lender uses the same income multiple calculation but have a significantly lower minimum income requirement of £50,000. Again, this allows borrowers to purchase more expensive properties than they’d be able to with other standard lenders.
Capital Raising for Buy to Let Investment
Some lenders will allow you to use the equity in your residential property to make a buy to let investment but will require you to have a property to purchase lined up, or a buy to let mortgage offer in place. What makes this lender unique is that you don’t need the property particulars or a buy to let mortgage offer to apply for the equity release. Then, when it comes to purchasing your chosen investment property, you will be in a prime position as you will have the cash ready and waiting to secure the purchase, potentially putting you ahead of any competition.
Buy to Let Portfolios as Repayment Strategies for Interest Only Mortgages
Good news for portfolio landlords; this lender will accept equity in your buy to let portfolio as a repayment strategy on your residential interest-only mortgage. Potentially, rather than needing to sell and downsize to pay off the capital at the end of your mortgage term, you can use the equity in your portfolio by either selling or remortgaging a buy to let instead.
Discounted Purchase for Tenants
Discounted or concessionary purchases are not a particularly common transaction; however, they do have a use. When a landlord is looking to sell a buy to let property, it is quite common to ask any long-term tenants of the property whether they would like to purchase first. If the landlord is wanting to offload the property and is happy to accept a discounted value from the tenant, then this lender will mortgage the property at the full open market value and use the difference as the tenant’s deposit. For example:
The property is worth £400,000. The landlord has agreed a £300,000 purchase price with their tenant to ensure a quick and easy sale.
This lender will count the £100,000 difference between the agreed sale price and open market value as a 25% deposit, without the tenant having to contribute anything (though they can if they want).
The tenant will need to pay Stamp Duty for the property purchase, so in this example, that would be £10,000.
To qualify for this arrangement, tenants need to have been in the property for a minimum of 12 months before the sale.
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