The Client
The clients had a large portfolio of properties within their local area who were wanting to raise funds for ongoing property purchases and building projects that they had lined up. Both applicants were mainly self-employed, with one applicant having income from employment.
The Scenario:
Due to ongoing investment plans, they needed to raise funds from their existing properties. The issue was, most of their properties had a mortgage which were on fixed rates, meaning that if they were to raise funds via remortgaging, they would have Early Repayment Charges (ERCs) to pay. The client’s current residential property however was unencumbered (no mortgage) therefore this was going to be the most cost-effective route for raising the required funds.
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The Solution:
After gathering the clients’ self-employed tax documents covering the past 3 Years, we were able to carry out a detailed Affordability Assessment to see how much they would be able to borrow. Initial affordability calculations showed good client affordability, however a lot of lenders also take into account the Buy to Let Mortgages in the background and run an affordability assessment on those as well. Although the mortgages were covered by the monthly rental income, the way Lenders assess this can often reduce the amount they are willing to lend on the residential mortgage. Additionally, some Lenders do not lend to applicants who have above a certain number of investment properties.
After sourcing a Lender who could provide the clients with the required funds on a competitively low interest rate, the application was submitted and proceeded to offer within just two weeks. The funds have subsequently been released and in turn we have assisted the client with obtaining an additional mortgage for the purchase of another Buy to Let property.
Summary:
When trying to raise funds against your residential property, every Lender has different criteria on which those funds can be used, as well as different assessment on affordability of background income. Therefore, it is crucial to ensure you speak with an experienced Mortgage Broker who understands the Lenders’ criteria to save you time and money when trying to secure a residential remortgage.
Please get in touch today with our dedicated team of Specialist Mortgage Advisers for any Residential Remortgage or Mortgage questions you might have. Call us now on 03330 169 646. Alternatively, you can also fill in this short online form and we will get back to you straight away.