A Tailored Mortgage Solution for Unconventional Circumstances

A quick overview of the client

Our client, a professional in their late 30s, had saved a lot of money through hard work and smart financial management. With a stable income and a good eye for investments, they were ready to expand their property portfolio.

The client’s requirements 

The client’s goal was to buy an undervalued residential property through a private sale. They planned to rent it out on a buy-to-let (BTL) basis. This would provide a steady rental income and the potential for the property’s value to increase over time.

The scenario

Property details

The property in question was a well-maintained three-bedroom house in a desirable neighborhood, valued at £475,000. However, the purchase involved an unconventional funding arrangement, including multiple financial gifts totaling £100,000 from the client’s family members.

The client’s objective was to get a mortgage to buy the property and then rent it out for a steady income.

Challenges faced

The client’s finances were solid, but multiple gifts made things complicated. High-street lenders are often skeptical of unconventional funding sources, making it hard to get a mortgage the usual way. Furthermore, the client’s age was also a factor, as most lenders limit mortgage terms for applicants over 35 years old.

Our approach

At Expert Mortgage Brokers, we pride ourselves on our ability to craft tailored solutions for even the most complex financial scenarios. Our approach was multifaceted, designed to navigate the challenges posed by the multiple gifts while ensuring a smooth and efficient transaction.

Locating a suitable lender

The first step in our strategy was to identify a lender that was willing to consider the client’s unique circumstances. After an extensive search, we partnered with a flexible, forward-thinking lender who understood the nuances of the situation and was open to exploring alternative financing options.

Addressing the valuation challenge 

One of the key challenges we faced was the property’s valuation, which was lower than the agreed purchase price. To address this, we proposed a two-stage solution that would not only facilitate the acquisition but also pave the way for a long-term buy-to-let (BTL) mortgage.

First, we arranged a £375,000 bridge loan with a 9-month term to cover the purchase price and initial costs, taking into account the £100,000 in gifts. This allowed the client to acquire the property swiftly, with the understanding that a more permanent financing solution would be implemented shortly thereafter.

Successful outcome 

With the bridge loan in place, the client successfully completed the purchase, and the property immediately began generating a healthy rental income of £2,300 per month.

The next phase of our strategy involved transitioning the client to a long-term BTL mortgage. Having previously identified a lender willing to consider the gifts and the BTL arrangement, we were able to seamlessly transition to the remortgage phase.

Ultimately, we secured a £375,000 BTL mortgage for the client at a competitive interest rate of 3.5%. This not only provided a stable, long-term financing solution but also allowed the client to benefit from the favorable terms and conditions associated with a dedicated BTL product.