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Residential Remortgage – “Part and Part” Case Study

The Client:

The client is a married couple that own their own residential home. They were looking to raise some money against the property, plus pay off the mortgage and two further advances currently outstanding. The money raised is to be used for multiple Buy to Let purchases.

The husband was the only source of income, and he had only just started a new job about 6 weeks before the Fact Find was completed. The wife stays at home and looks after the their three children. This is something that needs to be identified as a possible issue, since three dependents with one source of income can severely affect affordability potential with most lenders.

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The Scenario:

The clients wanted an “Interest only Residential Mortgage”. The difficulty with this is you need a certain amount of equity in the property for a full Interest Only Residential Mortgage to be considered, as most lenders need to be able to use the sale of security property as an acceptable repayment strategy. The other difficulties with Interest Only Residential Mortgages is the maximum Loan to Values, plus minimum income requirements, with most lenders needing at least £75,000 for one applicant, or £100,000 joint for two.

The Solution:

A “Part & Part Mortgage” (i.e part “Interest only” and part “Capital Repayment”) fits perfectly in this scenario. There is only one main Lender that can offer this product. The income of £66,000 is acceptable. The three children do not affect affordability. The lender will allow up to 60% on interest only, plus a further 15% on repayment – i.e. 75% Loan to Value (LTV). The lender is also fine with the client having just started a new job, whilst also being in probation. They also have a different way of working out equity required for our desired repayment vehicle.

They have a tool that gives us a figure on the average property value in the area and that amount is the equity that needs to be left at the end of the mortgage term, for downsizing and sale of property to be acceptable. With the full 75% of interest only plus repayment, it does not fit this criteria, but once the repayment aspect is paid off at the end of the term, it has the equity required, this is important to remember.

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Key Points to consider:

  • Interest only “part and part” is certainly achievable on less than £75,000 income.
  • You can be in probation and have started a new job recently.
  • The equity finder is generally more relaxed than a fixed amount that other lenders demand.
  • Child Dependents don’t necessarily ruin affordability.

To find out more and speak to one of our highly experienced and CeMAP qualified Mortgage Advisors, call us now on 03303 112 646. You can also fill in this short online form to get started. Our team of Residential & Buy to Let Mortgage Advisors will get back to you straight away.

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Cross Charge Bridging Loan – Case Study

The Client

A client had an initial enquiry for bridging finance. The client was looking to purchase a commercial property for £150,000 and carry out £25,000 of works to convert it to the upstairs commercial area into residential accommodation under Permitted Development (PD) Rights.

At the time, the client had no cash to purchase the property, therefore needed to raise the funds elsewhere.

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The Solution

As the client had an unencumbered property worth £100,000, we sourced a lender who could provide a “Cross Charge Bridging Loan” across both properties at 75% LTV. This allowed the client to raise £75,000 against their existing property and provide a loan of £112,500 on the commercial property. The capital raising covered the initial £37,500 deposit for the commercial property purchase, and the remaining £37,500 covers the cost of works, legal fees and interest costs on the loan.

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The rate secured for the bridging loan was 0.85% per month due to the commercial property involved, however as it was a cross charge application, it meant only one application was required and one set of legal fees for the lender to help reduce time and money.

As the clients intention is to remortgage the finished semi-commercial property, the benefit of the lender used is that the client can refinance both properties with the same lender onto individual mortgages with minimal legal work, reduced arrangement fees of 0.75% (standard 1.50%) and reduced re-inspection valuation fees to provide a seamless transition from the bridge.    

To know more and speak to one of our Bridging Finance Expertscall us now on 03303 112 646. You can also fill in this short online form to get started. Our team of Bridging Loan Experts will get back to you straight away.

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First time Bridging Loan – Heavy HMO Refurb – Case Study

The Client

We recently were successful in assisting a First time Landlord client in purchasing a standard 3 bed Victorian terrace. Their goal was to turn the property into 6 bed HMO by extending to the rear and converting the loft space.

The client only had enough funds to cover the initial deposit, stamp duty, fees, and the initial tranche for phase one of the works.

The Property

Since the property was to be heavily refurbished and developed, obtaining a traditional mortgage for such a property development is just not possible. Typically, lenders will only lend you the money to buy the property, meaning you wouldn’t be able to carry the conversation. Plus, with such significant works being carried out lenders would have major concerns about their security, probability of the works completing and future value.

Contact us today to discuss Bridging Loans and how we can assist you.

This is where a Bridging Loan works perfectly and really adds value.

Most Bridging Lenders can lend up to 70/75% net of fees to help buy the property, based on its current value, pre conversion. In addition to this, they can also lend a further sum of money to assist the completion of the major building works. Typically, a facility of up to 70% of the Gross Development Value is available.  (GDV = value of the property after the works have been complete).

In this clients’ particular scenario the property was purchased for £345,000. After the works were completed, the property was worth £650,000.

Note – 100% LTV for bridging finance is available if you have additional security in the background.

To add even more difficulties to the equation, the client had never completed such a development / refurb project before, nor had any building or landlord experience. Most bridging finance lenders would require you to have some exposure in this type of environment.

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The Resolution

Despite the limitations, we were able to secure the client a competitive deal that enabled to them to complete the transaction and finish off all the works needed.

However, it doesn’t end there… Like any form of finance, bridging loans also need to be paid back, usually within 12 months.

Typically, there are two repayment strategies for bridging finance:

  • Sale of the asset, OR
  • Refinance the loan onto a traditional term mortgage

In this client’s scenario the exit plan was to refinance as they wanted to benefit from the rental income.

This posed another problem however, as the client was considered a first-time landlord, having never let a property before. On top this the tenancy was for an HMO and the property was to be owned/let via a Limited Company.

The majority of Buy to Let lenders will not lend to applicants looking to arrange a HMO having never had any Landlord experience before, as they consider this type of buy to let very specialist and high risk. However, this wasn’t an issue for us, we were able to source a competitive HMO Mortgage deal for the client enabling them to pay off the bridging loan within the loan term and achieve their HMO landlord dreams.

To know more and speak to one of our Bridging Finance Expertscall us now on 03303 112 646. You can also fill in this short online form to get started. Our team of Bridging Loan Experts will get back to you straight away.

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First Time Buyer Non-Standard Income Case Study

The Client

The clients were a couple looking to purchase their first home but one client was leaving their job to further their career prospects by taking a research position to further qualify and increase their earning potential. This would mean that they would no longer have an earned income and they would not be able to afford a property in their area with just the income of the remaining employed client. The client was due to receive a non-taxable stipend to support their studies but had been turned away by banks saying they could not accept the income.

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The Resolution

We managed to secure the clients a mortgage with a High Street Bank on a low, fixed 5 year interest rate. The bank were happy to accept this income and take the rationale in cases of this nature that the clients job prospects and future earnings will improve after completing their studies and will be able to secure a higher future income in a professional field, reducing the risk to the lender.

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The client had thought that they would have to rent for the 3 year duration of their PHD but are now settling in to their new family home. This demonstrates the power and reach of using a whole-of-market broker which has the extensive knowledge and experience to reach out to lenders who are willing to work with clients with non-standard incomes and arrangements.

To know more and speak to one of our Residential Mortgage Expertscall us now on 0333 0166 600. Alternatively you can Request a Callback now via this short form. Our team of Residential Mortgage Experts will get back to you straight away.

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Benefits of using a Whole of Market Mortgage Broker – Case Study

The client came to us after being declined by a mortgage Lender for a property they were looking to purchase. The client was looking for a Buy to Let property purchase. Their previous Mortgage Broker was referred to them by their estate agent. A lot of UK Mortgage Brokers work with either a closed or restricted panel of Lenders and can’t therefore approach every lender in the UK. This means their knowledge in a specialist market would be very limited.

This is where a truly “whole-of-market” Mortgage Broker like ourselves are able to demonstrate their real worth and benefit. Working with ALL UK Lenders including the Specialists, we can help our customers with both the straightforward and also difficult cases as well. Additionally, being a “Directly Authorised” firm, means we can provide tailored and specialist solutions to our clients from the widest selection of UK lenders.

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This client had sadly given up on their hopes of being able to proceed with this specific property purchase and were also planning on giving up on buying in the property market. However, being a Brokerage who always wishes to explore every single opportunity for our clients, we therefore completed a Fact Find with the client in order to fully understand their exact circumstances.

Having completed this exercise we were very confident we could help this client with their mortgage requirements to enable them to proceed with their Buy to Let property purchase. We’re delighted to say that we were successful in being able to arrange a mortgage for this client for their BTL purchase and help them realise their dreams.

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Furthermore, we also helped their son and daughter for their respective Residential mortgages as a result of the excellent service and flexibility the client experienced from us in finding a complex solution to their requirements.

Things to consider:

  • Being Directly Authorised means we can truly provide our customer with a whole suite of solutions for their mortgage needs.
  • Our clients have access to ALL UK Lenders, giving them the confidence that they will most certainly get the most competitive deal in the market.
  • We can help clients with simple, complicated and specialist criteria with ease.
  • If there is a solution for the client, we can find it and help the client with it.

To know more and speak to one of our Buy to Let Mortgage Expertscall us now on 0333 0166 600. You can also fill in this short online form to get started. Our team of Buy to Let Mortgage Experts will get back to you straight away.

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Limited Company Purchase of 5 flats in 1 Block – Case Study

A client called in initially looking for some advice as she was looking to purchase what she had been advised by the Sellers as a multi-unit block of 5 flats on one Freehold title. This was a Limited company purchase with an element of the deposit coming from a gift by a family member.

We sourced and submitted the application with the best deal over the initial 5-year fixed period.

However, following receipt of the application, the Lender then checked with the Land Registry and notified us that the flats were not in fact all one title, but instead as 5 flats with separate leases. The client was informed of this and she decided she was still wanting to proceed with the purchase the flats, but this would now have to be done with 5 separate mortgage applications.

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Following this, there was then an issue of the freehold, which also was intended to be purchased. This exposure can be a problem for lenders in situations like this, so we had to source the deals, and confirm certain lenders would take however many in the block, without breaking their exposure limits.

We ended up with a solution which encompassed 3 different lenders and advised the client she would have to place the freehold in her own name, whilst the purchases of the leaseholds would go into her company name, as lenders usually want to see the freehold owned in a separate legal entity to the leaseholds.

This was all worked fine, and we managed to submit and complete all 5 property purchases successfully.

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Things to consider:

  • When purchasing a block, it’s important to know how the property is set up. One multi-unit on a freehold title will be one application, whilst if there are separate leases in place, it will be multiple.
  • If owning both a freehold as well as also leaseholds in a building, the freehold would be advantageous to hold in a separate legal entity.
  • Lenders have exposure limits to buildings and also streets and areas, and generally will not lend over a certain percentage of a building.

To know more and speak to one of our Buy to Let Mortgage Expertscall us now on 0333 0166 600. You can also fill in this short online form to get started. Our team of Buy to Let Mortgage Experts will get back to you straight away.

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Portfolio Landlord – 2 Buy to Let Purchases – Case Study

We first started working with this client back in November 2020 with at the time, their new Buy to Let purchase and also servicing some of their existing property portfolio. The client has an existing portfolio of Buy to Let and HMO properties.

Their key requirement when choosing a Mortgage Broker was the necessity in getting a timely service, timely updates and regular contact with a dedicated person throughout the process.  This is exactly the service which Commercial Finance Network specialise in and happens to be one of our unique selling points.

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Last month we helped this client again with two new property purchases. The client called us on a Monday morning and advised us of the 2 properties they were looking to purchase. We then searched the whole-of-market for the best deal available for them.

Following our presentation of their options, we were then able to get a Decision in Principle for the client by Monday afternoon and their purchase offer was accepted by the Vendor, due to the efficiency and speed of our service by Tuesday morning. Due to the speed in which we’re able to act both initially but also commitments to swift conclusions, our client was also able to negotiate discounts off the purchase prices, saving them several thousands of pounds in the process.

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On Tuesday afternoon the applications were then submitted to the Lender. Within 24 hours from the initial point of contact with the client, we were able to submit full applications to the Lender with successful outcomes on both properties.

As well as recommending us to other members of their local property networking groups, this particular Portfolio Landlord now exclusively gives us ALL of their mortgage broker business, based on our efficiency, dedication and service delivery – key factors upon which we mostly certainly pride ourselves. The UK property market can be quick, so we need to be quicker! At ALL times, it is essential that we maintain the highest levels of Customer Service and delivery – this is the main pillar upon which Commercial Finance Network was founded and sets us apart from our competitors.

To know more and speak to one of our Buy to Let Mortgage Expertscall us now on 0333 0166 600. You can also fill in this short online form to get started. Our team of Buy to Let Mortgage Experts will get back to you straight away.

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Residential Mortgage – Same Day Mortgage Offer Case Study

The Client

The client was an existing Homeowner who was looking to move into a larger home to start a family with their Husband. The client approached us as her husband could not go on the application since he had an adverse credit history.

History

The client had previously approached her existing mortgage provider, who had told her that she could not borrow the desired amount due to how they were stressing her income and expenditure.

The client had some credit card debt and also had a personal loan. The personal loan was due to finish in less than 6 months from the date of application.

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The Resolution

We managed to secure the client a mortgage with a High Street lender who would disregard the loan payments due to the remaining term. The application was submitted at 10.15 in the morning, the lender completed an automated valuation on the same day and confirmed that the property was a suitable security and had issued the binding mortgage offer before 16.00 the same day.

The lender requested no documents other than the signed mortgage declaration. This was possible as the clients salary from her employment was paid into a current account with the same bank. Some High Street lenders can check incomes in this way and it allows for a smooth and efficient client journey.

To know more and speak to one of our Residential Mortgage Expertscall us now on 0333 0166 600. You can also fill in this short online form to get started. Our team of Residential Mortgage Experts will get back to you straight away.

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Limited Company Buy to Let Purchase – Case Study

We recently had a client make an enquiry about purchasing a property through his Limited Company in order to expand his Buy to Let portfolio. The company is an SPV (Special Purchase Vehicle) that has been set up for a while, and has two existing properties within it. The applicant that called also has one other Buy to Let in their own personal name.

There are three applicants in total, applicant two earns £12,000 PA and applicant three earns £11,000 PA, the main applicant earns £45,000, rising up to £72,000 PA, with shift and danger allowance. The second and third applicants do not currently own any other Buy to Lets. The second applicant doesn’t own any property at all.

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We went through the fact find with each client and asked the relevant credit questions. We were informed that everything was ok, and there shouldn’t be any adverse credit. However, the DIP (Decision in Principle) was declined based on adverse credit with applicant two’s credit file. We requested a copy of the credit report, and unfortunately there was a number of historical Adverse Credit issues on there.

We then re-sourced the deal, and found a lender that would accept the relevant adverse, as long as there was no adverse within a certain time frame. We managed to place the deal, and it was accepted. Now the client is in a better position to not only purchase and increase his portfolio, they are also in a better position to remortgage when the time comes, and achieve a better rate.  Things to consider:

  • 3 applicants are acceptable, especially within limited company
  • Not all clients need to own an existing property
  • An income over a certain threshold is not necessary, as long as they have an income that they can prove
  • Adverse credit doesn’t necessarily mean they are unable to get a mortgage

To know more and speak to one of our Buy to Let Mortgage Expertscall us now on 0333 0166 600. You can also fill in this short online form to get started. Our team of Buy to Let Mortgage Experts will get back to you straight away.

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Residential Remortgage with Adverse Credit – Case Study

A client recently called in with an enquiry with regards to mortgaging his existing property and the basic fact find details were taken.

The information provided resulted in discovering that there were two kitchens in the property and the client had some bad credit which he has now consolidated. He currently owns the property with his mother.

The client wanted his mother taken off the Mortgage and Deeds via transfer of equity. The client’s partner was to take on the mortgage jointly with the client. This would usually be a straightforward process, however the client’s mother was to remain in the property. This makes almost every lender on the market very nervous as it falls outside of their criteria.

The property has two kitchens, which whilst not being favourable with many lenders, it can be possible. Although on further fact finding, I discovered that not only were there two kitchens but also two front doors which essentially means there are two houses on one title.

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The client also has a little recent adverse credit, some historical adverse credit and he was looking to consolidate current debts. They were looking to redeem the original mortgage, which was only taken out 9 months ago, along with the second charge, and some credit card debts and loans. They were paying around £3500 per month on the property finance alone.

We persevered with this one and managed to find one lender on the entire market that was comfortable with the multi-unit aspect, the two front doors and the mother remaining in the property. We managed to save the client almost £1000 per month by consolidating debts and moving the secured loans into one at a better rate.

Things to consider:

  • Almost every lender on the market will not allow someone being transferred away from ownership to still remain in the property post loan. This is because they retain some legal rights to the property.
  • Properties with two kitchens are generally ok with some lenders, but if the kitchen is fully functioning and allows someone to live independently in a different area of the house as a self-contained unit, it becomes essentially a residential multi-unit on one title and it is very difficult to place.
  • Historical adverse is ok dependent on what it is and when it was registered/satisfied.
  • A certain amount of recent adverse is also ok, as long as it is no more than a certain amount within a certain time frame. Adverse that is against secured loans is the most damaging, unsecured is less problematic, and communication and utility adverse is the least likely to affect your ability to get a mortgage.

To know more and speak to one of our Residential Mortgage Expertscall us now on 0333 0166 600. You can also fill in this short online form to get started. Our team of Residential Mortgage Experts will get back to you straight away.

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