This week's case study highlights how Alexander Hall helped a couple refinance an existing property, in order to raise a deposit for a new residential purchase.
Our clients' challenge
Our clients owned an investment property which they wanted to re-finance, to raise a deposit for a new residential purchase. A residential mortgage would also be required for their new home. The clients lived in rented accommodation and were therefore classed as ‘non owner-occupiers’, a scenario which excludes a significant number of buy to let lenders.
A further challenge was that they wished to borrow a sum which did not pass most lenders ‘stress tests’, meaning the rental income on the property was not considered sufficient to service the required buy to let re-mortgage loan. In addition, one of the applicants was a foreign national, resident in the UK on a visa which was close to expiry; another key risk consideration for a number of lenders. They had monthly outgoings for nursery fees which also limited the affordability calculation for the new residential mortgage.
Alexander Hall's solution
We found a lender that would use a ‘top-slice’ approach to their buy to let rental calculation. This meant that they were able to use a portion of our client’s disposable employment income, in addition to the rental value, in calculating the maximum buy to let loan available. We were therefore able to raise the required mortgage, releasing the sum needed for the new property deposit and accompanying costs. The lender also took a flexible approach to the applicant’s visa status given their length of time in the UK and secure employment status.
The nursery costs were excluded from the affordability calculation by the lender as we could demonstrate that the clients would have surplus funds to cover their remaining commitments post-completion. Our clients were also delighted with the products and the rates we were able to get for them. The rates were 1.79% for the Buy to Let and 1.54% for the onward purchase.
