I recently secured an assignable contract mortgage to allow a client to complete on a new build purchase.
First, a quick explanation of assignable contracts. If a third party buys a property from a developer while it is still under construction, but doesn’t complete on the purchase, they are in possession of the contract for that property. They can then sell this contract on to a buyer, usually for a profit, before the property itself is even finished.
Most lenders don’t offer assignable contract mortgages, but at Enness we have access to a few who can. Generally, lenders will only lend at 75% loan to value (LTV) of the original purchase price. This is to stop these third parties abusing the system.
My client was a banker in his early 20s, based in London, who was looking to buy for the first time. The contract of the new build he was interested in had been purchased for £300,000, and the property value had now increased to £400,000, which was the purchase price my client had agreed upon.
Before coming to us he had spoken to four different brokers, none of whom had been able to help him because of the complexity of the case. We, however, are able to sit down with the decision-makers and pitch these cases in such a way that we can find a satisfactory solution for all parties concerned.
As well as his fixed salary, my client received a considerable amount of bonus income, which I needed the lender to take into account when calculating affordability.
I managed to secure an offer from one of the only lenders in the market who will lend under these circumstances. This lender was willing to lend 75% LTV of the original purchase price, which meant a mortgage of £225,000. My client was able to put down the other 25% as a deposit, plus the £100,000 needed to meet the current purchase price.