High loan to value mortgage for clients with large property portfolio

THE SCENARIO

My clients were a married couple with two children. They were looking to purchase a new family home, valued at £550,000. However, they need a high loan to value (LTV) of just under 90%, which is quite a stretch for many lenders.

They had a property portfolio of seven properties, some of which were standard buy to lets and some of which were Houses in Multiple Occupation (HMOs).

They had an extremely unusual arrangement with their purchase, so they needed specialist help with arranging finance. Having searched online for a broker who could assist with unusual cases, my clients approached Enness for help.

Several years ago, my client’s exchanged on a property and put down a small deposit to close the deal. They agreed a completion date of November 2017, and the vendor allowed my clients to live in the property until then, paying monthly instalments of ‘rent’ which would reduce the balance owed. This was agreed through a ‘license to occupy’. My clients now needed us to arrange the finance for them to complete in November.

My client was self-employed. Looking at the figures, I knew we realistically needed to use the latest years’ figures to be able to achieve the level of borrowing required. This meant only a handful of lenders would be available to us. Furthermore, my client’s property portfolio meant they had a lot of unsecured debt and were very highly geared on most of their properties.

OUR SOLUTION

I found a lender who was happy to consider my client’s debt-to-income position, and also give a generous multiple on my client’s self-employment income from the last year.

However, this lender was not happy with the arrangement between the vendor and my clients. Therefore, I suggested the license to occupy was removed, and a regular assured shorthold tenancy (AST) was put into place. The client and vendor were happy with this and the lender was able to consider this as a purchase off a landlord, which is a much more standard arrangement.

Ultimately, I arranged a 2-year variable product at 3.69%. My clients’ are now looking to remortgage another of their properties through me, and I look forward to working with them in the future.

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