The client came to us through a Google search, having been told by their broker that what they required simply was not possible. They had found a dream country home through a search agent and were looking to act as quickly as possible to purchase.
The client who works in Private Equity, with a complex income structure, needed to raise capital for their deposit using the equity in their existing home which also had a mortgage on it and thus required a loan of £1.76m to pay off the existing debt and have the capital for the deposit on the onward purchase against a value of £2.35m. The client then required a standard residential mortgage of £1.8m on £2.4m to complete this purchase.
This was an incredibly complex case, with some major hurdles to overcome:
- In order to get sufficient equity to purchase the client needed to capital raise on their existing home, known as a let-to-buy, to repay their existing loan and to provide the capital required for the deposit. They required a capital raise of £1.76m against a property value of £2.35 – well above the usual buy-to-let limit.
- The client also required a standard residential mortgage of £1.8m on £2.4m to complete the purchase.
- To make this borrowing affordable the client required an interest-only loan.
- We needed to find a lender that allowed capital raised to be used as a deposit for an onwards residential purchase.
- The lender had to work from an employer reference for latest years income (LLP yearend 31/12/19) and a 19/20 tax calculation from the CFO when assessing affordability, made all the more difficult in the midst of pandemic and with the spectre of double dip recession hanging over the economy.
- The capital raise loan needed to be interest only for affordability purposes.
- Both loans required were above £1.5m, loan sizes not offered by several lenders.
- We needed a lender who allowed first time landlords.
Solution & lending facility
With access to every lender on the market and vast experience negotiating property finance of every kind, Private Finance’s expert brokers are equipped to find solutions to mortgage-related problems, even in the unique situations borrowers are currently facing due to the Coronavirus pandemic.
Our expert consultant was able to find a lender who would create a bespoke product for this client, given that it was outside of their normal BTL lending limit – this is only possible given both their knowledge of the market and Private Finances relationships with specialist lenders. The client was able capital raise £1.76m on an interest only basis fixed for 5 years, to pay off their existing mortgage and use the funds as a deposit for the purchase and also borrow a further £1.8m on a standard 2-year fixed repayment and interest basis at 1.94% enabling them to purchase their dream property and let their existing home.
Please note, at the moment, lenders across the board are changing their lending criteria and coronavirus has added a huge amount of complexity to peoples incomes in certain situations – so now it is more important than ever to speak a consultant who can help you navigate this shifting market.