The Client:
The client is a homeowner. She and her son share this property and he pays the mortgage, but her name is equal part to it. She works part time and is on a modest income of £11,000 annually. She also has debt that far exceeds her income, she has 2 loans that total quite a bit over double the income. One of these loans is also paid by her son but is solely in her name. Despite the amount of credit, she has no adverse and a good score.
The Scenario:
The client was looking to purchase a Buy to Let property from her sister. She needs a lender that will accept her despite low income, and high debt. I had to make the client aware of the fact that despite the residential mortgage and one of the loans being paid for by the son, it remains her commitment. If the son stopped paying the mortgage and loan, she would remain liable for the payments, so they must be taken into account as her debt. The client also has no physical deposit. As she is buying the property in an inter family sale, her sister is willing to gift the equity as the full deposit, so we need a lender that is happy with those things.
The Solution:
Being a whole-of-market Mortgage Broker, we have the knowledge to know that some lenders will have a kinder approach to debt to income percentages. We had to make sure we could find a lender that had no specific criteria on this, and as long as the client could fit their requirements for adverse, it would pass their internal score and decision in principle. We also needed a lender that was ok with the client being a first time landlord, with no minimum income requirements, of which there are plenty to choose from. As we deal with so many weird and wonderful scenarios, we are well versed as a company at finding solutions, and we found a High Street lender that was happy with an inter family purchase with the vendor gifting the entire deposit via equity, this is something not all enders are happy with.
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Summary:
When purchasing a Buy to Let property, income amount isn’t overly important unless you have a much higher debt to income ratio. Options become limited when this is the case. You also need to realise that it becomes limited when buying from a family member and have no physical deposit with the equity being gifted as the deposit.
Key things to consider for a first time landlord purchase from family member with equity gifted as deposit:
- Debt to income ratio
- When you share debt, but the other person pays, it is still your debt
- Inter family sale with equity gifted as deposit
Contact us today to speak with one of our CeMAP certified Mortgage Advisors regarding your Buy to Let Mortgage enquiries. Call us today on 03330 169 646. Alternatively, please complete this short online form and one of our Advisors will call you right back.