I recently arranged a buy to let mortgage on interest only for four applicants, on a new build property in Liverpool.
The client originally came to us through an introducer. He was looking to purchase an investment property in a new build development, but there was a catch. There were three others who also wanted a piece of the investment, making a total of four applicants for the mortgage.
There are few lenders who will consider four applicants, thanks to the increased admin and risk on their side. To make things more complex, we needed to use all four incomes in order to pass affordability checks; but those lenders who will consider four applicants are generally only prepared to take two incomes into account.
Two of the applicants in this case were self-employed, and one of them had decreasing business profits. Where a company’s accounts show a downward trend, the lender will generally base their calculations solely on the most recent, and lowest, figures. This was going to be a problem for the size of mortgage my clients needed.
They wanted to raise all the finance for the purchase against a property they already owned and thereby avoid dipping into their own bank accounts. All four of them were named on the deeds of this property as well, which happened to be in the same block as the prospective buy to let. This was another complicating factor as lenders looking to limit their exposure can sometimes be reluctant to lend on two properties in the same development.
The fact that my clients wanted an interest only mortgage was the final challenge. This is particularly difficult for holiday lets, which is how they originally intended to use the property before deciding to rent it out on a more long term basis. As the only other property they owned was a main residence, they weren’t able to use this as the repayment vehicle.
This mortgage had so many factors that I had to call on my knowledge and understanding of different lenders’ criteria to reach a solution. There are very few lenders prepared to consider an application like this, and I had to make sure I knew their terms inside out.