I recently secured a let to buy mortgage for a couple so they could raise money on their existing home to purchase a new residential property. There were a few challenges that came with this case, however, the first being the wife had been on maternity leave for a year and a half and would not be returning until after the mortgage had completed. As the husband earned £28,000 and her £65,000, her income would be a large contributing factor to whether they could afford the mortgage in the eyes of a lender.
Because of this, we firstly had to ensure the lender was happy to receive a letter from her employer stating the nature of her return, therefore calculating affordability based on when she would be earning again. Along with this, my clients had school fees to take into account, making their situation harder affordability wise. The rental yield was also fairly low on their existing property for the let to buy, so we required a lender with a more generous rental calculation than available on the high street.
As far as the residential side was concerned, a residential mortgage tends to be much cheaper than a buy to let, so we needed to raise a larger mortgage in order to make it cheaper and benefit from the lower rates, while also meeting my clients’ budget.
My clients also had a gifted deposit, so needed a waiver to be signed by the relative to confirm they had no interest in the property because it was a true gift and not a loan.
Despite all of this, I managed to source a lender firstly, with a rental calculation which allowed for more borrowing than achievable on the high street, as well as securing 5.5 times their income on multiples, which is unheard of compared to the high street norm of 4-4.5 times.
I secured a fixed rate of 2% on the let to buy and a fixed rate of just 1.43% for the residential mortgage. This also allowed us to raise more money out of the let to buy property in order to pay for the recently increased stamp duty tax, ensuring stamp duty was included in the whole borrowing.