Let’s explore a case I recently completed on – a buy to let high loan to value mortgage. My client, a successful asset manager, was purchasing a new property which she intended to keep as an investment and rent out as a buy to let to subsidise her income.
The property was in central London and the purchase price was £900,000. My client needed a buy to let high loan to value mortgage of £600,000. At this level that meant she required borrowing at 65% loan to value.
My client’s main residence was unencumbered and she had a provable income of c. £300,000 per annum. However, lenders have ‘rental calculations’ that only allow a certain level of borrowing regardless of loan to value. In London the rental yield is usually quite low because the property values are so high and in this case was not sufficient to cover the amount my client needed to borrow.
Although this 65% loan to value did not fit the lender’s calculation we were able to make up the difference to finance this buy to let high loan to value mortgage. This was possible because I assured the lender about my client’s general affordability and stressed to them the high level of potential my client had within her career. Sometimes banks are happy to make concessions for clients with strong aspirations and a good overall financial picture so that they can have their business over a number of years.
This is not usual practice when it comes to buy to let high loan to value mortgages and can be attributed to my relationship with the lender. My client would typically be offered £475,000 but I managed to get her offered the £600,000 she needed to make this mortgage possible.