Our client is a day-rate IT contractor who had come to the end of his current mortgage deal. He didn’t require any extra borrowing and wanted to move onto a fixed rate to protect him from potential interest rate rises.
However, the case was not straightforward as we needed a lender who would be happy to lend to a contractor. Basing the mortgage on their day rate, rather than salary and dividends. The client also has a high debt-to-income ratio, exceeding the maximum salary income multiples for most lenders. The client also wanted to stick with an interest-only mortgage, rather than repayment, to keep monthly costs low.
The combination of these factors severely restricted the choice of lender he could move to. We identified that the best option was for the client to stick with his existing lender and do a product transfer.
Key requirements: –
A lender comfortable with the client being a day-rate contractor, who was prepared to base the client’s income on that day rate, rather than salary and dividends, when calculating how much he could borrow.
A lender who could lend even with the high debt-to-income ratio.
The lender happy to lend on an interest-only basis.
After sourcing the mortgage market. We realized that a product transfer from the client’s existing lender would be his best bet as no further underwriting was required. But, the lender was already happy with the client’s work status and the level of borrowing on an interest-only basis.
The client had plenty of equity in the property so there was no need for a mortgage valuation or further underwriting. We were delighted to inform our client that the lender had issued a product transfer for the full amount required at a competitive fixed rate.
Property value: £1.49m Loan amount: £573,179 LTV: 40% Rate: 1.41% fixed for three years Lender product fee: £0 Monthly payment: £674