£154,000 buy to let on property value of £270,000

1.69% interest rate at 2 year fixed

Lenders’ issues with upfront rent payment resolved through broker’s specialist underwriter contacts

Our client

The client originally lived in a property in the North of England but as he had moved to London for work, he had rented his northern property which he wished to keep as an asset.

What was needed?

The property was on a Consent to Let agreement with the client’s mortgage lender (the lender agrees the owner can rent the property with a residential mortgage), but as the deal was running out a formal buy to let mortgage needed to be put in place.

What was the challenge?

The client had moved to London and was living in rented accommodation (which not all lenders are satisfied with) but the key issue was that the current tenant for the Northern property had paid a years’ worth of rent upfront, this upfront rent payment meant lenders were assessing the client’s case as risky.

Surprisingly, ALL lenders were declining the case initially as there was a perceived conflict between the lender and the tenant.

This was because although the tenant had met his agreement and paid all the rent in advance, from the lender’s perspective if the client were unable to manage his money properly and, for example, spent the whole of the rental income immediately, it would leave the client unable to pay his mortgage. In this eventuality, the lender would be unable to repossess the property as the tenant has a right to remain for the whole year.

How we provided the solution

The client consulted Bethany Smith, Associate at Rose Capital Partners, to understand how he could achieve his complex buy to let mortgage goals affordably.

Initially it seemed as if Bethany would be compelled to place the case with one of the specialist lenders that are geared for more commercial lets (as rents in this sector are usually paid upfront) but this would have meant around a 4% interest rate.

Bethany eventually managed to speak with a specialist underwriting teams at one of the high street lenders, explained the specifics of the case and the underwriter agreed that they were satisfied to proceed.

What was the rate?

The rate was a 2-year fixed at 1.69%.