Lender: Regional Building Society
Product: 2 Year discounted rate
Rate: A variable rate, currently 6.04%, with a discount of 2.50% giving a current rate payable of 3.54% for a period of 24 months
Mortgage Adviser: Craig Leigh
Client name: Charlotte
Mortgage Application date: 30/10/2022
Charlotte approached us for some advice as she was looking to purchase a new home for her and her 3 children. Charlotte was going through a divorce and was using the settlement figure as the deposit for her new home with her children but would need a mortgage to fund the difference so she would be able to get the property she wanted. Due to the client being self-employed for a period of 6 months this income was not able to be used for an application as it did not meet any lenders self-employed criteria – The only other income the client had was her maintenance income.
After researching over 50 lenders and making numerous calls to lenders and underwriters explaining the situation there were very few options available, although not all lenders would consider lending the required amount.
One lender, a regional building society would consider the mortgage application as they based the affordability on the net income which was of course favourable to the client as maintenance is tax free income.
Due to the client recently being divorced and moving from the family home she wanted to settle into her new home without too many large costs as she had to get used to living with 3 children on her own and on her income – the lender allowed the mortgage to be interest only and this was due to the very large deposit put down by the client and the feasibility of being able to downsize in years to come.
The 2-year product not only allows for the client to become more comfortable with her new situation it also allows her to be able to look at her options in 2 years’ time – when she will then have 2 years’ worth of self-employed accounts to use to be able to explore her options further with other lenders. At this time in the future Charlotte can also explore switching to a repayment mortgage, or to a fixed rate product as she will have many more options and lenders available to her.
The client is also fully aware that she will be able to overpay on the mortgage if she wanted to and this would mean she will be able to reduce the capital balance of the mortgage and this just adds to the flexibility there is for the client not being committed to a larger mortgage payment but being able to overpay if she wishes and as and when it suits her.
The client has good self-employed regular income circa £50k as a pa to a CEO of a large global company so the overall case was all built on solid foundations with good income and credit history.
The client is purchasing a property over £1m and is using the divorce settlement as the deposit and for the stamp duty, the reason for large value property is the need for enough bedrooms for children and to stay in the local area as children are at school already and did not want to uproot them.