Let To Buy Remortgage
Want To Let To Buy Where The Rental Income Will Not Stack Up
Five months ago Simon contacted us for a self cert mortgage
The reasons he needed a self cert mortgage
Simon has been self employed for 3 years as property developer with an irregular income so he needed access to a self cert mortgage at the time of his enquiry. Simon did not have an accountant at the time and this also made it difficult to get lending from the high street lenders. There was one other twist that made this mortgage enquiry just that little bit more difficult to place and that was that he wanted to let out his existing property to buy a new one - but needed to remortgage the existing home to release funds for the deposit on the new one.
What were the choices we faced?
- A residential purchase self cert mortgage with a lender that ignored the existing property and a lender that didn't need accountant details, BM solutions, a specialised self cert lender was a lender that would consider this
AND at the same time look at...
- A buy to let remortgage (to provide some additional funds to help with the deposit on the new purchase). When we looked deeper into this deal we found that the rental income was a little short for the full 85%loan which the client wanted. (Most buy to let lenders will lend a maximum amount based on the achievable rental income of the property) Once we found this out we then had to consider different lenders that looked at the buy to let mortgage based on the clients personal income rather then rental income - For this scenario we considered the lenders The Mortgage Business and The Mortgage Works. These lenders would consider lending the maximum amount that the client needed to ensure the whole transaction could go ahead.
Unfortunately the client then advised us that "a friend of a friend" was a mortgage adviser so he decided to go with them at this time.
What happened next?
Three months later the client came back to us and told us that the other broker had tried Abbey on a 'let to buy' mortgage application and Bank Of Scotland for the buy to let application.
Abbey had asked for proof of income & Bank Of Scotland had not agreed with the rental income on the application and therefore reduced their loan amount accordingly - this meant that Simon he had a short fall for the deposit he needed and therefore was not in a position to proceed with the house purchase (as his deposit wasn't enough) He now needed to move quickly as he had already wasted 3 months of his time with a broker that didn't understand the lenders criteria as well as we did.
With time ticking away...
We submitted a full application to BM solutions on the Friday and requested a desk top valuation - which was agreed and the full offer was issued on the following Tuesday - An impressive 3 working days!.
We also contacted BM Solutions for the Buy to Let as their existing product range was very competitive with low rental calculations - unfortunately due to several credit checks being carried out on the client this was declined on a low score basis.
Our concern at this stage was the client's other broker had tried several lenders which had lowered his score - so we recommend that the client obtain comparable evidence for the Bank of Scotland buy to let which the other broker was processing for him - The valuer on the initial deal with the other broker wouldn't move on his initial assessment but he eventually agreed that if the client could provide a signed tenancy agreement that he would increase the rental figure and with this increased rental figure he would then be allowed to borrow more with Bank of Scotland then initially stated.
Not greedy - just best advice!
Whilst this mortgage was not with our company - our concern for the client was that by applying to more lenders we would lower his credit score even further and Simon would incur further costs for a revaluation - the other broker didn't seem to have a clue about down valuation on rental or what to do about it - but the client took my advice and managed to get this sorted himself. This was the best advice based on the circumstances and we proved to the client that customer service is always at the top of our list - rather than just trying to get the sale.
The Bank Of Scotland buy to let was offered and the client is now pushing for a completion date for both mortgages.
A happy client?
We would assume so based on the testimonial we received a few days later:
"I contacted The Mortgage Broker Ltd on a Friday and had an offer by the following Tuesday. Ash (the adviser) offered concise advice and was friendly. She did not apply any pressure regarding getting a decision. I cannot recommend her highly enough"
