Summary of the case
- Buy to rent mortgage
- Capital raised for £29,000 debt consolidation
- Recently missed mortgage payment
- Client living in the property
What we have achieved for the client
- Overcame recent missed mortgage payment
- Overcome that the client had not yet left the property
- Capital raised for debt consolidation into one manageable payment path
- Overcame tight rental calculations with a superior slicing solution
The stakes of the case
In this case, the client wanted to remortgage a property on a rental mortgage, when it was currently the client’s home. They owned another property, which they intended to move into, but during our initial discussions, there were tenants on site.
The client was waiting for the end of the notice period to take possession of the property in order to move into it.
Generally, mortgage lenders do not accept a case where the person named on the mortgage still lives in the property. Indeed, it could be a sign that the applicant does not intend to rent the property, which would be against the terms of the mortgage. Most lenders will want to see that the property is already rented to a third party tenant.
In this case, the lender was happy to accept that the client moved to another property.
The reason for the mortgage was to pay off debt, credit cards and a loan. So the client was looking to raise capital on the property he was living in to do this and then move into a second property he owned.
Overcome a Recent Missed Mortgage Payment with a Buy-to-Rent Application
There were several reasons why fundraising presented a challenge.
First, the client had missed a mortgage payment 6 months prior to speaking to us. For any mortgage lender, including buy-to-let, this poses an element of risk to a deal. Indeed, anyone borrowing who has not been able to maintain payments on a loan may be vulnerable to facing the same challenges in the future.
Of course, the circumstances that led to this may have been temporary, but regardless, when comparing two similar applications where this was the only difference, many lenders would not accept this which would be assessed as a recent problem on an applicant’s credit. the story.
Our adviser overcame this by researching lenders who offered greater flexibility over the applicant’s credit history. When the advisor pursued a policy decision, the lender took that factor back into the application and it was manually assessed by the lender for viability and approved.
Using top-slicing to overcome narrow rental coverage in the affordability calculation
Our second challenge, on raising the necessary funds, was that the rent calculation for the security property was very tight. This meant that rental income alone did not justify the affordability calculation, for the loan the client needed.
Our advisor overcame this problem by looking for lenders who could offer the client “top slicing”.
This is where a lender will consider an applicant’s excess personal income, to support a calculation of mortgage affordability.
Some lenders will offer a higher severance, as they are happy to accept that, if tenants stop paying rent in order to cover the mortgage payment, the mortgage holder could and would use their personal income in the meantime to maintain mortgage payments.
This is a very useful area of criteria for many applicants with low rental income, but who have excess personal income.
In this case, our advisor was able to raise capital up to 75% of the loan to value, which generated the total sum the client needed to pay his outstanding debts from credit cards and a loan .
If you are looking to remortgage a buy to let property and you have experienced issues with your credit history, we may also be able to help and raise capital for you.
Contact an advisor directly by calling our toll-free number above or inquire online.
Think carefully before securing other debts on your property. Your property can be repossessed if you do not continue to pay your mortgage.
By consolidating your debts into a mortgage, you may have to pay more over the entire term than you would with your existing debt.