I recently helped a self-employed client who was looking to arrange a let to buy remortgage – that is, remortgaging your main residential property onto a buy to let product in order to capital raise for an onward residential purchase. Enabling the client to upsize but also retain his original property.
In such cases, people often haven’t saved enough for another deposit, but have equity in their existing property, so it makes sense to remortgage in order to release it for their new purchase.
The original property to be turned into a buy to let was located in Central London and was worth £950,000, and the new residential property was valued at £1.2million.
A challenge in this case came in the form of my client’s employment, as he was self-employed and only had two years’ worth of accounts to prove affordability. However, we work with self-employed clients regularly so know how to present this type of case to a lender, and which lenders to present it to.
Another advantage of a let to buy deal is that a client can arrange two mortgages simultaneously, and ensure they complete at the same time.
The results in this case were excellent, with both mortgages secured at sub-3% rates; the buy to let mortgage was arranged at a rate of 2.79% fixed for two years, at 75% loan to value (LTV), which is high considering the low yields of Central London.
Furthermore, I was able to arrange a 2-year fixed rate of 1.47% on the new residential at 80% LTV.
I was delighted with these results – particularly as they are rarely accessible to self-employed clients with limited accounts. However, at Enness this is one of our areas of expertise and as such we have the network of lenders who can support us with these clients.