80% Loan-to-Value Mortgage on London Property for Client with Adverse Credit

• Client: Finance industry contractor with an irregular income structure and adverse credit
• Property: South London buy-to-let property valued at £995,000
• Challenge: Required 80% LTV despite gaps between contracts, adverse credit and being a first-time buyer and landlord
• Finance: 80% LTV mortgage at 4.53% fixed for two years over a 25-year term

Securing mortgage finance can be challenging where a borrower has an irregular income structure, adverse credit and limited experience as a property investor. Enness was approached by a contractor working in the finance industry who was looking to purchase a South London property.

The property was an exceptional flat valued at £995,000. It had previously been owned by a family member and was being purchased by the client using gifted equity. The property was intended to be retained as a buy-to-let investment.

The client’s circumstances meant that several lenders and brokers were unable to assist. As a contractor working on a daily-rate basis, the client’s income could include gaps between contracts, which can make affordability more difficult to assess. There was also some adverse credit, including a short-term loan that was in the process of being repaid.

The client was also a first-time buyer and first-time landlord, creating further considerations for lenders assessing the application. The combination of the high property value, 80% LTV requirement, irregular income and adverse credit meant that a specialist approach was required.

Enness approached several lenders before identifying a specialist bank prepared to consider applications involving adverse credit on a case-by-case basis. The client’s wider circumstances and ability to support the proposed mortgage were presented to the lender as part of the assessment.

The lender was prepared to consider the application and provide the required level of borrowing against the property. An 80% loan to value (LTV) mortgage was secured against the £995,000 property.

The resulting facility was arranged at a fixed rate of 4.53% for two years over a 25-year term at the time.

The case demonstrates how high loan to value mortgage applications can require specialist lender access where a borrower has an irregular income or adverse credit history. The availability of finance will depend on the nature of the credit history, income profile, property and individual lender criteria.

For borrowers with more complex circumstances, specialist mortgage finance can help identify lenders able to assess applications on their individual merits.

Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, underwriting, affordability, credit assessment, property suitability and lender criteria. Terms, rates, LTVs and availability may vary depending on individual circumstances.

Risk Warning:
Your property may be repossessed if you do not keep up repayments on your mortgage or other borrowing secured against it. Property values can fall as well as rise. Borrowers with adverse credit may have fewer lending options and may face higher borrowing costs. A high LTV increases the amount borrowed relative to the property value and can increase exposure if property values fall.