A significant majority of the clients we work with are self-employed and, as anyone in the same position will know, that can mean fluctuations in income due to business growth, investment or expansion. Our latest case was a prime example of that scenario, with a client whose self-employed income had increased by 1.5 times in the past year. Often, lenders will want to base affordability criteria on two years’ worth of records and therefore our Senior Mortgage Associate, Aimee Hadley, needed to secure a lender with a more flexible approach.
Case profile
Our client was looking to remortgage their buy to let property on a five year fixed term, and needed to move quickly as their mortgage had reverted onto his previous lender’s standard variable rate. Although the client had capital available, that was being used to fund the purchase of their own home.
The buy to let property had previously been let out to friends and family at a lower than market value and our client had also invested in renovating the property. Therefore the rental income hadn’t been fully leveraged in recent years. Additionally, their new tenant had only been in place for a month on an assured shorthold tenancy, which can be a red flag to some lenders who prefer to see long-term tenancy agreements in place.
Solution
Our relationships ensured we were able to identify a lender who could take a view on the situation, flexing to our client’s needs and providing them with a solution tailored to their specific requirements.
Deal Highlights
| Loan amount: | £103,000 |
| Rate: | 2.28% 5 Year fixed rate |
| Loan To Value: | 68.66% |
| APRC: | Overall cost for comparison 4.50% APRC representative variable |
| Term: | 25 Years |
| Type: | Interest only |
| Loan purpose: | Remortgage |
| Lenders arrangement fee: | 2.00% of loan amount |
| Early repayment charge: | 5% of outstanding loan if repaid in year 1, reducing by 1% year on year for 5 years |
Overall cost for comparison 4.50% APRC representative variable based on 63 monthly payments at a fixed rate of 2.28% followed by 236 monthly payments at the lenders buy to let variable rate, currently 5.09%. Because part of your loan is a variable interest rate loan, the actual APRC could be different from this APRC if the interest rate for your loan changes. For example, if the interest rate rose to 3.23%, the APRC could increase to 5.20%. The actual rate available will depend upon individual circumstances and may not be available to everyone. Ask for a personalised illustration.
Your home or property may be repossessed if you do not keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage. Think carefully before securing other debts against your home.
The FCA does not regulate some aspects of Buy to Let mortgages.
