This information should not be interpreted as financial, tax or legal advice. Mortgage and loan rates are subject to change.
Category: Case study
Summary of the case
- Clients had moved to UK and were awaiting Right to Reside documentation
- Clients were first time buyers
- High loan to value was needed
What we achieved for the client
- Identified a lender who accepted combination of case attributes
- Achieved 80% loan to value
- Secured a high street rate rather than having to turn to specialist/more expensive deals
The challenges of the case
With this joint application, both clients were first time buyers. In addition, they had moved to the UK five years ago but had relatively recently applied for the Right to Reside in the UK and had not yet received the paperwork to complete this process.
It was also important for the clients to achieve a high loan to value to secure two properties they were looking to buy.
As with many cases we work on, each factor in isolation does not constitute a complex case, however, where a couple of attributes of a deal come along hand in hand, investigative work is required.
The advisor on the case looked into 85% loan to value deals, the highest LTV currently available, but a lender could not be found at this level as the few lenders offering these deals did not fit with the clients.
The next step was to investigate 80% loan to value deals and two strong options were identified.
Buy to let borrowing on a visa or with a newly issued Right to Reside
If you have the Right to Reside in the UK, having moved here from abroad, as long as that can be demonstrated to the lender (a lender will ask to see a residency card or stamp in your passport) then this will cause you no issue in applying for a buy to let mortgage.
A lender will typically be unwilling to lend, if the initial rate period of your chosen buy to let mortgage is shorter than the expiry date of your visa for this reason. There are a very restricted number of lenders who may consider this scenario.
High loan to value buy to let deals as first time buyers
Historically the very highest loan to value buy to let deals, at 85%, were reserved for experienced landlords only. However, lender criteria changed and now first time landlords can secure this level of borrowing, if all other elements of the deal fit.
The options for borrowing at 85% LTV as a first time buyer are exceptionally narrow, and at the time of writing such deals are subject to underwriting, and a minimum personal income threshold.
You cannot currently borrow in excess of 85% LTV, but if you are struggling to get a deposit together you might consider using other property to fund a purchase.
If you are monitoring rates at any loan to value ratio, our buy to let mortgage calculator is updated twice a day with deals released by lenders from across the marketplace.
What we achieved for the client
In investigating the two options at 80% loan to value, we eliminated one lender early on, as a detail on the case did not fit.
Whilst we knew the evidence of the Right to Reside would be required by the lender, we were able to start the application for the clients, knowing they were due to receive their documentation shortly.
At 80% loan to value the clients had the funds required to purchase two buy to let properties. Through careful due diligence we were able to place the deal with a high street lender, where typically rates are lower than through specialist lenders.
