Our latest case study highlights how we helped a contractor with their own limited company successfully refinance their existing home, convert it to a buy-to-let investment, and secure a mortgage to purchase their new family home.
Our clients' challenge
Our client is a director of their own limited company, who worked on a short-term contractor basis. They required a ‘let to buy’ solution that involved renting out and releasing equity from their existing home and buying another as their main residence. They therefore required both a Buy to Let and a Residential mortgage.
They told us they were having difficulty securing the residential mortgage lending they needed, because the majority of lenders based their lending calculation on the salary and dividends our client was paid through their company.
Furthermore, for the buy to let re-finance, the rental yield of the property also presented a challenge, as most lender’s rental coverage calculations offered a lower level of borrowing than the client required.
Alexander Hall's solution
We sourced two lenders who could cater for each of these challenges. The residential lender offers a specific policy for self-employed, limited company contractors, that involves calculating the lending amount on the applicant’s contractual ‘day-rate’ value (typically greater than the salary and dividend figure).
This gave our client the means to obtain a higher lending amount on the new residential mortgage. On the buy to let re-mortgage, we used a lender that offered ‘top-slicing’ policy; whereby personal disposable income is used in addition to the rent to calculate borrowing.
Again, we were able to provide an offer for the lending required, with both mortgages remaining comfortably affordable.
