Contractor buy to let mortgage despite little affordability

THE SCENARIO

I recently helped my client, who as a contractor operating as a limited company, wanted to purchase a new buy to let property based in London. Due to the nature of my client’s employment, his accounts from the previous year only showed approximately £400 profit. This would undoubtedly be considered a problem, as the majority of high street lenders have a minimum income requirement of £25,000. This is because if an investment property does not have a tenant for a couple of months, there is no rental income to pay for the mortgage. This meant my client would have to pay it out of his own money, which was not affordable when based on his previous small net profit.

If that wasn’t all, once the application process was underway, I discovered my client also had an unknown CCJ on his credit file due to a missed mobile phone payment. Lenders will nearly always see any kind of CCJ as unfeasible when accepting a mortgage application, so I needed to ideally find a lender who would have no minimum income, be able to offer a pay rate product and also be willing to consider CCJs.

Although initially proving quite a challenge, my excellent relationship with a number of specialist lenders meant I was able to find one who would be willing to take a view of my client’s profile. This lender was also able to offer tiered rates, which would accept adverse credit and had no required minimum income.

The lender was willing to offer a pay rate product that would make up for the shortfall in rent. Not only this, the CCJ turned out to be redundant and was consequently removed at the end of the process. This was, of course, an even better result for my client and a clear example of the benefits of having a broker in your corner instead of going it alone.

OUR SOLUTION

I managed to secure a very competitive 3.85% lifetime LIBOR tracker rate. My client was extremely happy with this result and the added bonus of cleaning up his credit score.

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