Contractor let to buy loan within a month before stamp duty changes

CONTACT STEVE

THE SCENARIO

I was recently contacted by a couple in their mid-30s who were looking to purchase a new residential property for £670,000 in Isleworth that would serve as a family home in the future. They had a strong preference to retain their existing property and let it out to benefit from the strong rental market in Greater London.

In a let to buy transaction, clients remortgage their current residential property onto a buy to let and often raise funds to part fund the deposit for their new residential purchase.

The first task I faced with this case was that he worked as a contractor and had less than a month to run on his current contract. The second challenge was that my clients required over 4 times their joint income with a borrowing amount over £500,000, which many lenders will not consider. Further difficulties also arose due to the buy to let aspect, as – in order to raise a sufficient deposit for their purchase – my clients needed a lender assessed their rental income against the mortgage interest rate (payrate) and not a fixed ‘stress test’. They also needed this at a high 80% loan to value. Finally, my clients were in a race against time, as they were looking to complete prior to the stamp duty tax changes at the end of March 2016.

After extensive discussions directly with an underwriter and having assessed overall affordability, I was able to find a lender who would work from the contract value (despite less than a month remaining) rather than the standard 2 year averaged self-employed income, which is most common. Options for a payrate buy to let lender were also limited given the high loan to value, yet I was able to take advantage of a product exclusive to Enness.

Throughout the month, communications between myself, clients, solicitors and lenders took place almost daily, but ultimately delivered exactly what the client was looking for.

OUR SOLUTION

I was able to secure a variable 80% buy to let product at 4.50% and a fixed 80% residential product 2.84%. The entire transaction was completed within a month, which my clients were delighted with, especially considering a stamp duty saving of over £20,000 alone.