Summary
We recently helped our customer arrange a buy-to-let remortgage in Basingstoke where adverse credit meant the choice of suitable lenders needed to be considered carefully.
Our customer was a 54-year-old self-employed landlord looking to remortgage a buy-to-let house valued at £400,000. They required a mortgage of £224,250 and wanted to secure a new fixed-rate product.
The main challenge was the customer’s adverse credit history. Rather than this preventing the remortgage altogether, we needed to identify a lender whose credit criteria could accommodate the circumstances alongside the required loan, property and mortgage term. We were ultimately able to arrange the required buy-to-let remortgage with Godiva.
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The Scenario
Our customer owned a buy-to-let house in Basingstoke, Hampshire and needed to remortgage the property.
They were 54 and self-employed, with a reasonable level of income and no liabilities recorded within the information provided to us. The property was valued at £400,000 and the customer wanted to borrow £224,250.
This meant the borrowing represented approximately 56% of the property’s value, giving the customer a significant amount of equity in the property.
The main details of the case were:
- Property location: Basingstoke, Hampshire
- Property type: House
- Transaction: Buy-to-let remortgage
- Property value: £400,000
- Mortgage required: £224,250
- Approximate loan-to-value: 56%
- Customer age: 54
- Employment: Self-employed
- Mortgage term: 15 years
- Product required: Fixed-rate mortgage
- Credit history: Adverse credit
Although the level of equity was relatively strong, the credit history still needed to fall within the lender’s criteria.
The Challenge
The main issue with this buy-to-let remortgage was the customer’s adverse credit.
Mortgage lenders have different approaches to adverse credit. The type of credit issue, when it occurred and the lender’s individual criteria can all affect whether an application is acceptable.
Having a lower loan-to-value does not automatically mean a lender will disregard adverse credit. The lender still needs to be comfortable with the customer’s overall circumstances and the credit history disclosed within the application.
We therefore needed to find a lender where several parts of the case worked together:
- The lender needed to accept the customer’s adverse credit circumstances.
- The property needed to be acceptable for a buy-to-let remortgage.
- The lender needed to provide the required £224,250 borrowing.
- The customer’s self-employed status needed to meet the lender’s requirements.
- The requested 15-year mortgage term needed to be available given the customer’s age.
- A suitable fixed-rate product needed to be available.
Finding a lender that could accommodate the credit history alone would not have been enough. The complete application needed to fit the lender’s criteria.
What We Did
We reviewed the customer’s circumstances and the details of the existing buy-to-let property before considering which lenders were most appropriate for the remortgage.
The adverse credit was particularly important because lenders do not all assess previous credit problems in the same way. A lender that may be unsuitable for one type of adverse credit could potentially consider another, depending on its criteria.
We therefore focused our research on lenders able to consider the customer’s credit history while also meeting the other requirements of the application ensuring we prioritise the cheapest lenders first.
We also considered the level of borrowing against the property value. With a mortgage requirement of £224,250 against a £400,000 property, the approximate loan-to-value was 56%. This allowed us to consider the case within the appropriate buy-to-let mortgage criteria rather than looking at the adverse credit in isolation.
Godiva’s criteria provided a route that could accommodate the circumstances of this particular application.
The Solution
We arranged the buy-to-let remortgage with Godiva on a two-year fixed-rate product.
The mortgage arranged was:
- Property value: £400,000
- Mortgage amount: £224,250
- Approximate loan-to-value: 56%
- Mortgage term: 15 years
- Initial product: Two-year fixed rate
- Lender: Godiva
This provided the customer with the borrowing they required while using a lender able to consider their adverse credit history.
Why the Solution Worked
The mortgage worked because the selected lender’s criteria matched the combination of circumstances involved in the application.
In particular:
- Godiva could consider the customer’s adverse credit.
- The required £224,250 loan was within the available borrowing for the property.
- The £400,000 property value resulted in an approximate 56% loan-to-value.
- The lender could consider the customer’s self-employed circumstances.
- The requested 15-year mortgage term was achievable.
- A two-year fixed-rate product met the structure required for the remortgage.
This is an important part of arranging mortgages where there has been adverse credit. The aim is not simply to find a lender described as offering adverse credit mortgages, but to find one whose criteria work with all aspects of the application.
The Result
The buy-to-let remortgage was successfully secured with Godiva.
Our customer was able to arrange the £224,250 mortgage required against their £400,000 buy-to-let property in Basingstoke on a two-year fixed-rate product over a 15-year term.
Most importantly, the customer’s adverse credit did not prevent us from finding a lender able to consider the complete application.
What This Case Shows
Having adverse credit does not necessarily mean a landlord cannot remortgage a buy-to-let property. However, it can affect which lenders are suitable and make lender criteria particularly important.
Two lenders can take different approaches to the same credit history, which is why understanding the details of the customer’s circumstances before submitting an application can be valuable.
This buy-to-let remortgage in Basingstoke also demonstrates that the wider application matters. Property value, loan-to-value, employment status, age, mortgage term and credit history all need to work within the same lender’s criteria.
For landlords with adverse credit, researching the available buy-to-let mortgage options before applying can help identify lenders whose criteria are better suited to their circumstances.
Need Help with a Buy-to-Let Remortgage with Adverse Credit?
If you are looking to remortgage a buy-to-let property and have previous credit problems, your options may depend on the type and history of the adverse credit as well as the property and borrowing required.
Kerr & Watson can review your circumstances, compare suitable buy-to-let mortgage options and identify lenders whose criteria may fit your situation.
Speak to an adviser to discuss your buy-to-let remortgage and the options available.
