The client: Moving is so expensive these days, once stamp duty and other related costs have been factored in, not to mention the hassle factor. So it is no surprise many homeowners are staying put and improving their existing home instead. Our client found himself in this position and needed to raise money to fund the works.
This should have been relatively straightforward as the client had enough income to satisfy a lender, derived from basic income plus regular bonuses. However, what made the application more complicated was that lenders look at outgoings as well as income when assessing affordability and how much you can borrow. Ou client had a large number of monthly subscriptions on his bank statements, which impacted the size of mortgage he could get.
This case required a lot of working with lenders to persuade them that the client’s subscriptions were non-guaranteed commitments, such as gym memberships and TV subscriptions, which could be cancelled at any time, and therefore shouldn’t impact his affordability in a negative way.
Key requirements: –
• A lender prepared to disregard the many non-fixed or mandatory commitments on the client’s bank statements.
• A lender willing to take the client’s bonuses into account as well as basic salary when calculating how much he could borrow.
• A lender prepared to add the arrangement fee to the loan.
After sourcing the mortgage market, we identified a lender who agreed to lend the full amount required at a ‘best buy’ rate. The application process: To support the mortgage application, the client provided evidence of his income and identity. We were delighted to inform him that a lender had issued a formal offer for the full amount requested, enabling him to carry out the refurbishment work on his house.
• Property value: £570,000
• Loan amount: £400,000
• LTV: 70%
• Term: 29 years
• Rate: 4.32% fixed for two years
• Lender product fee: £999 added to the loan
• Monthly payment: £2,018
