Our clients' situation
Our client was looking to remortgage two buy-to-let properties that were financed through a specialist lender. At the point they spoke to us, they had reverted to the standard variable rate, and wanted to secure new products with no early repayment charges as they intended to sell both properties in the near future. Unfortunately, their existing lender did not offer ERC free options and also refused product transfer rates due to a recent missed payment.
There were several additional complexities:
• The main applicant had recently changed their employment structure—resulting in a considerable drop in net profits.
• Rental income fell significantly short of the required stress testing.
• They were considered portfolio landlords, also owning two more mortgaged buy-to-lets. Both properties were vacant at the time of application, as they were on the market for sale.
• The household had significant ongoing expenses.
• Credit profile challenges included a missed mortgage payment.
• There was a potential guarantor option via a Joint Borrower Sole Proprietor (JBSP) structure but with the added challenge around a new role and their agreed start date.
With all of these factors combined, we needed a lender who could use the clients’ personal income to support the mortgage where the rental income fell short (known as ‘top slicing’), handle adverse credit, accept future income, support JBSP, and apply a common-sense approach to a highly nuanced case.
Alexander Hall's solution
After assessing the full situation and exploring all options, we placed the case with a private bank known for its flexible underwriting and holistic approach. This lender was able to:
• Accept JBSP, allowing the guarantor to support affordability without being added to the property title.
• Ring fence the ongoing expenses from savings so they didn’t negatively impact affordability.
• Consider the guarantor’s overseas savings account and treat the savings as the equivalent of the outstanding income needed to support affordability.
• Ignore the two vacant BTLs, as online listings evidenced imminent sale and therefore not long term commitments.
• Use the guarantor’s future income evidenced by a signed employment contract beginning several months later.
• Take a common-sense view on the adverse credit, supported by the overall strong asset and income profile.
• Consider top slicing to bridge the gap between rental income and required borrowing.
Although the underwriting process was understandably detailed and document heavy, the case went to offer after approximately two months.Our solution enabled our client to access the flexible, ERC free structure needed to progress their long term property plans. It’s a great example of high quality broking: understanding client objectives, challenging assumptions, and exploring alternative structures such as JBSP to find a tailored solution.
To talk to one of our advisers about your mortgage needs, call us on 08000 38 37 36 or book an appointment today.
This is for information only. Products and rates vary depending on your circumstances, lender criteria and products available at the time.
There may be tax implications when arranging this type of transaction, this depends on your personal circumstances and may change. We recommend that you take independent tax advice before making these decisions.
