BTL remortgage and resi purchase for returning UK expat airline exec

The Scenario

Our client is an airline executive who’d been working in Kuala Lumpur but had returned to the UK with his wife four months’ previously to take up a new role in London. They were planning to buy a home in Hertfordshire.

He already owned two buy to lets in London, and aimed to remortgage one of them, valued at £480K, to raise the deposit they needed.

The challenge: he had already left his previous employer seven months previously: under the terms of his leaving package was not allowed to start work with a competitor company for six months.

The Solution

Surprisingly, the BTL remortgage was the most challenging to set up: most BTL lenders want clients to have been resident in the UK for at least three years, certainly for the past two years.

If we were to avoid our client being hit with an expat rate there was in fact only one lender who would accept him.

On the residential mortgage, lenders don’t like long gaps in employment. On the basis of their published criteria, the lender we were recommending wouldn’t have considered our client’s application: when the application was being submitted he’d only been with his new employer for a matter of weeks.

Fortunately, private lenders are able to be more flexible than high street banks. And our ongoing relationship with the underwriter meant that we were able to reassure them that the gap in employment was in fact due to our client’s desirability within his employment sector.

Additional issues:

1 Optimising deposit payment: Our client was looking to raise as much as possible as a mortgage on his purchase, intending to hold back some funds from the BTL remortgage to cover renovations.

But we showed him how the cost of going over the lender’s rate threshold into their above 80% LTV rateband would cost him an additional £6,000 in interest over the five years of his fixed mortgage term

As a result, our client decided to put in an additional £17K as deposit to qualify for the better rate.

2 Accessing the surveyor’s comments: We secured free valuations on both properties, adding up to a considerable saving for our client.

There’s no process for lenders to share the results of free valuation reports, but we rang to ask if there were any surveyor’s comments.

The issue of possible flood risk had been raised on the purchase property (though it wasn’t a bar to lending). We were able to pass this on to our clients as a guide for their own enhanced valuation survey they were commissioning.

3 Fine-tuning drawdown: Our client expected to access the BTL remortgage funds straight away. We persuaded him to delay drawdown until a week before completion on the purchase was due, to save on interest costs.

A five-year fixed rate at 2.04%.