I recently submitted two successful mortgage applications for the same client – a let to buy remortgage with a simultaneous purchase.
I had previously arranged financing for this client, and he enlisted my services again for his latest move. Married with two young children, he was looking to move out of his London flat into a larger family home in the countryside. He wanted, however, to keep his current flat and rent it out.
Initially, it was thought the value of the London flat was £650,000, against which my client was looking to borrow just over £420,000. The purchase price of the new property was £740,000, with a further £400,000 taken out against it – meaning an aggregate debt of just over £820,000 across the two properties which, combined, had a value of £1.4m.
For the purchase, lenders’ affordability checks presented a few problems. My client was self-employed; he was the director of his own limited company, and payed himself a salary and dividends. In order to pass the affordability assessment, however, I needed to find a lender who was happy to work off the business’s net profit figure.
At this point, we hit a bump in the road. The flat on which we were applying for a let to buy remortgage was down-valued. As a result, the lender reduced the maximum amount they were prepared to lend against it to £403,000 – nearly £20,000 less than my client needed.
I therefore restructured his financing to ensure he could still borrow the same amount overall. I increased the borrowing on the new property to £420,000. In this way, I made sure the aggregate debt remained the same and both lender and client were satisfied.
In addition to these last-minute complications, we were pushing hard to complete on both mortgages before the April stamp duty deadline, meaning there was an element of time pressure.