The situation
Our client was a first-time buyer and first-time landlord seeking to purchase a studio flat as a buy-to-let investment.
The application was structured at around 49% loan-to-value (LTV). The property was located above commercial premises, including a coffee shop and a solicitor’s office—an arrangement that can restrict lender appetite in the buy-to-let market.
At the time of application, the client had a stable employed income and was living in long-term, secure rental accommodation. They also had savings available for the deposit, although the funds were held overseas at the point of application.
The challenge
A number of factors combined to make this a more complex buy-to-let application:
• The client was both a first-time buyer and first-time landlord, which reduced the number of suitable lenders
• The property’s location above commercial units meant some lenders were unwilling to consider the case
• Lenders that rely primarily on personal affordability assessments were unable to offer lending after reviewing the application
• Many lenders using rental stress testing were only able to support borrowing below the level required
• The overseas location of the deposit funds introduced additional considerations around source-of-funds checks
The solution
After reviewing the available options across the market, the case was placed with Principality Building Society, whose criteria aligned with the client’s circumstances.
This was because Principality assesses buy-to-let applications using rental stress testing rather than borrower income, and the required borrowing was supported within their lending parameters at the agreed LTV.
They were also prepared to leave consideration of the impact of the commercial premises to the surveyor’s valuation comments. Following a sense check, the lender was comfortable with the client’s position, including their stable housing arrangements and lack of plans to relocate, and deposit source-of-funds checks were handled by the conveyancing solicitor in line with Principality’s standard process.
The outcome
The application progressed smoothly and reached mortgage offer in under a week, allowing the client to proceed with their purchase.
Why this matters
This case demonstrates how access to a broad range of lenders, including broker exclusive options, and an understanding of individual criteria can help identify suitable solutions for buy to let applicants with non standard circumstances, including first time landlords and properties that fall outside typical lender preferences.
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