I recently helped a client complete a buy to let remortgage, as he – like many of our clients – was looking to save money on monthly repayments.
My client was currently on an extremely expensive rate and required a new loan, however, this was just at the point where many lenders decided to raise their rental calculations in wake of criteria changes in the buy to let sector.
Whereas landlords were previously required to have a monthly rental income which would cover the mortgage by 125%, assuming a stressed interest rate of 5%, the majority of high street lenders have now changed this to 145% times 5.5%.
Initially I would have been able to secure a very competitive rate, however, due to the rental calculation changes, his rental income was just a little short to be able to cover the loan.
This resulted in two different options for my client. The first was that I could go with a more expensive lender who would be willing to offer a more generous rental calculation so he could receive the full loan amount. Alternatively, he could receive a slightly lower amount, but with a much more competitive rate and lower arrangement fees, ensuring he would be able to save more money each month.
Having proposed both options to him, my client made the decision to go for the lower amount and benefit from a bigger saving – and simply make a bulk payment himself to pay the difference. As my client was a very experienced landlord with approximately 8 properties in his portfolio, he was happy to make this decision in order to move forward.
I was able to secure this deal and provide an extremely favourable solution for my client, resulting in a huge £500 saving per month on his mortgage repayments.