Short-term Finance for a client with Low Income
THE CLIENT
A self-employed client with adverse credit and a low income (sub-£5000 from multiple sources) looking for a loan to pay back an expensive mortgage on a house that they had jointly owned with their spouse for circa 12 years. Due to market volatility leading to stricter lender stress tests, the client was unable to raise the funds needed to cover their existing loan balance (a shortfall of 30%). To put this into context, most lenders had previously stressed loans on a 5-year fixed rate at product pay rates circa a 3.5% range, which serviced in most cases a higher loan. Now these sit in the 6%+ range.
In addition, the client had extended the property with no planning. Facing the prospect of losing the property, the client sought a 12-18 month loan to give them an opportunity to sell the property or evidence a higher rental income to enable a longer term/higher loan with a new lender. The situation was extrememly time-sensitive with the finance needing to be cleared within 40 days.
THE PROPERTY
A large terraced house in South London that was rented out to a third party on a single assured shorthold tenancy (AST).
THE FINANCE
In this situation, broker expertise was essential. Specific lender knowledge and access to bespoke offerings made it possible to offer the client a solution. Following a consultation, Mortgage Evolution found a 12-month finance solution for the client and advised them to switch their rental income to a different type of tenancy to enable them to evidence higher accounts and to ensure their oustanding credit default was cleared. The terms of the lending included:
- Loan of £450,000 (max. loan to value of 70% gross)
- Retained payments (no monthly payments needed)
- Rate of 0.93% PCM
- Lenders fee at 2%
- Personal guarantees required by each applicant
- Completion within 36 days
WHAT THE CLIENT SAID
...review coming soon!
Portfolio Loan for a Commercial Property
THE CLIENT
An experienced client looking to raise cash on their commercial portfolio. There was no onward purchase at the point of application. Finance was needed to settle an expensive lending facility that was in place and for future projects. The timeframe for completion was narrow.
The portfolio consisted of three properties held in the client's trading estate business company. The loan sought was upwards of 70% loan-to-value across the three properties.
The applicant held a diverse income structure from multiple companies incorporating dividends and a small PAYE and rental income amount.
THE PROPERTY
The portfolio (three properties) were tricky from a commercial lending perspective, encompassing a coffee shop with an active cinema and theatre; a book shop with a self-contained flat; and a vacant semi-commercial unit with four recently-converted flats above. The portfolio was valued at £2.3 m.
THE FINANCE
The applicant needed a commercial lender who could offer a competitive fixed rate with the option of over-payments and/or interest only to ensure a consistent cash flow. The client also required a lender who could complete the case as a one-loan facility as opposed to three separate deals, and who would consider lowering the standard personal guarantees to a smaller percentage (the normal being 100%).
There was a three-month window only to get this case completed as the cleint's existing lender's term had expired. It would have cost the client a huge expense and penalty had this not been paid back. Mortgage Evolution completed the case within 2.5 months.
Summary of what was offered as one loan facility:
Total loan secured: £1.3 m
Info: 5-year fixed rate of 4.65%. Interest-only payments for 2 years with capital and repayment on the remaining term up to 20 years (enabling cash flow). 40% personal guarantee negotiated in addition to a debenture over the company.
Lender's fee of 1.25% was added to the loan.
Overpayments of 10% per annum agreed without penalties.
Once completed this arrangement left the client with upwards of £600,000 to use against their next property projects.
WHAT THE CLIENT SAID
"I am over the moon with what has been achieved. It certainly wouldn't have been possible without Gareth's strong lender relationships. Thank you."
Residential Buyer
THE CLIENT
A married couple with two school-aged children, looking to purchase their first home. Having saved up for years the couple found their "dream home" a year earlier than planned.
THE PROPERTY
A residential house that ticked all their boxes.
THE FINANCE
Having found their dream home, the difficulty the clients faced was having to use just the latest year's accounts from their limited company (rather than an average of the last two years, which is what most lenders work from). However, the clients' business was growing and was expected to achieve another strong year accounts-wise.
A mortgage was secured that enabled the clients to borrow five times the net profit of the company, plus salary. Given this we opted to use a flexible residential lender in order to secure the property - the lender used just the latest year's accounts and took the net profit into consideration.
Due to the flexibility of the lending, the rates were slightly higher than those from a high street bank, so a plan was put in place to take a two-year discounted rate with no early repayment penalties. This enabled the clients to remortgage to a mainstream lender once the company's second year of accounts was finalised several months later; allowing the rate to reduce.
The clients are now living in the house of their dreams and are sitting on a very competitive long-term fixed rate, for reassurance against further rate increases.
WHAT THE CLIENT SAID
....review coming soon!
Bridging Finance for an Auction Property
THE CLIENT
A property portfolio landlord needing finance for their very first auction product.
The loan needed to be a maximum loan-to-value of 75% to ensure the cash was available to refurbish the property to a higher specification. The aim was to exit the bridging finance using the sale of the refurbished property. As per the standard requirements for bridging finance, the client needed the deal to be completed within 28 days or would face losing their 10% deposit with the auction house. The application was to be under a Trading Company with no debenture held.
THE PROPERTY
The property was based in East Kent and was derelict at the time of auction.
THE FINANCE
Mortgage Evolution sourced a respected and reputable specialist lender who we were confident would be able to help the client achieve his goals; namely the 75% loan-to-value to a first time auction buyer.
Terms were issued for this bridging finance application in a matter of hours, with the offer sent to the client within 48 hours and a valuation instructed the following day. After a few delays down to the legalities of the purchase, the finance was secured and the completion took place 20 days later. Terms were based over 6 months via rolled-up payments at a rate of 0.59%, with no exit fee and no debenture.
WHAT THE CLIENT SAID
"Gareth is the kind of guy I like to do business with, he moves fast and always keeps me in the loop, not to mention when things get a bit tense with bridging loans! He’s there front and centre working hard to get the deal closed early rather than on time. If you want a broker that has your back and works at the speed of light for you, Gareth is your guy."
Residential Remortgage for the Self-Employed
THE CLIENT
An IT Contractor paid via an umbrella company, referred to Mortgage Evolution by another satisfied client. They were looking to remortgage on to a better rate and raise some capital for debt consolidation.
THE PROPERTY
A standard residential house.
THE FINANCE
Mortgage Evolution sourced a mainstream lender who specifically worked with clients in the IT field and those who were employed on a contractor basis.
The funds were secured at a rate that was 0.4% lower than their current mortgage at an amount that enabled the client to achieve their debt consolidation goal - to pay off a previous home improvement loan. It was a speedy process, with a timescale from application to offer of just 4 days!
WHAT THE CLIENT SAID
"A big thank you to Harry for his professionalism, attentiveness and fantastic communication throughout the process. Harry skilfully guided us through the application process and was able to arrange a superb mortgage for us that ticked every box. Absolutely delighted with the service we received!"
Residential Mortgage with a Shortfall in Funds
THE CLIENT
A middle-aged applicant with a long-term salaried job who had been declined by their own bank on the basis that their affordability was £60,000 short of what was needed in order to move forward with the purchase.
THE PROPERTY
A residential house.
THE FINANCE
With access to the whole market for the intermediary sector, Mortgage Evolution used their contacts and expertise with correctly judging income and expenditure, to source a lender that was able to meet the client at the figure they needed. The mortgage application was submitted on the day the client put in their offer, with a formal offer being delivered within 5 days of the application.
WHAT THE CLIENT SAID
"I can not thank Paul at Mortgage Evolution enough. I was convinced that as a loyal customer of the same bank for over 20 years they would be the most obvious choice for a new mortgage. I am so grateful to Paul for sourcing us a better (and cheaper) lender which enabled us to move into our dream property."
Multi-unit Freehold Property
THE CLIENT
A property developer by trade with a diverse property portfolio made up of mainly buy-to-lets and small commercial property, looking to buy a multi-unit property on one title.
The multi-units needed to be refinance up to 70% loan-to-value to replenish cash flow. The application was through a special purpose vehicle (SPV) company that had been operating for 1 year (can be a brand-new SPV btw!).
THE PROPERTY
Two beautiful new-build three-bedroomed houses completed under one title with no shared facilities.
THE FINANCE
The multi-unit was valued at £475,000, with rents of £2000pcm based over the two units. Mortgage Evolution utilised its access to specialist lenders and knowledge of the Buy to Let market. A multi-unit freehold property (usually a block of flats under one freehold but in this case 2 houses) is a specialist property and this, coupled with some other quirks of the case such as the SPV shareholding set up, meant the application process was complex.
Mortgage Evolution was able to secure the client a 5-year fixed rate at just over 3%, the product came with no lender fees, a free valuation and interest only up to 30 years. The mortgage offer was produced within three weeks of the initial application and the onward purchase (which is what the additional funds were used for) completed later the the same month.
WHAT THE CLIENT SAID
"Professional from start to finish. I deal with lenders, tenants and developers every day, and knew I had a tricky case with this purchase. Gareth took all of that stress away and enabled me to move forward with my next venture."
