Introduction
We recently helped our customer, an existing landlord in their 40s, arrange a buy-to-let remortgage on a two-bedroom property in Chorley, Lancashire.
Our customer wanted to raise additional funds against the property to repay outstanding credit card debts and cover an early repayment charge on their existing mortgage. However, they had no traditional employment income and relied on maintenance payments, benefit support and rental income.
Finding a suitable lender required careful consideration because many buy-to-let providers have minimum personal income requirements, even where the rental property generates sufficient income to support the mortgage.
After reviewing the available options, we arranged a five-year fixed-rate buy-to-let remortgage with Accord. This allowed our customer to consolidate their unsecured debts and secure more predictable mortgage payments.
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The Scenario
Our customer was a homeowner and existing landlord in their 40s with one dependent child.
They owned their main residence outright, without a mortgage, alongside other buy-to-let property.
Our customer had limited income outside their buy-to-let property and wanted to raise additional funds through a remortgage to consolidate existing unsecured borrowing. Their income circumstances and existing financial commitments restricted the lenders able to consider the application.
The customer wanted to refinance an existing two-bedroom rental property in Chorley to release equity and clear outstanding credit card balances.
Mortgage Details
| Detail | Information |
| Location | Chorley, Lancashire |
| Property type | Two-bedroom house |
| Property valuation | £125,000 |
| New mortgage amount | £62,500 |
| Equity retained after remortgage | £62,500 |
| Loan-to-value (LTV) | 50% |
| Mortgage term | 25 years |
| Repayment method | Interest-only |
| Lender | Accord |
| Mortgage product | 5-year fixed-rate buy-to-let remortgage |
| Additional borrowing purpose | Debt consolidation and early repayment charge |
The property had sufficient equity to support the proposed borrowing at 50% loan-to-value.
However, the customer’s income arrangements and existing credit card commitments made lender selection more complicated than the property’s low loan-to-value might suggest.
The Challenge
The main difficulty was finding a buy-to-let lender that would accept our customer’s non-standard personal income while allowing additional borrowing to consolidate unsecured debts.
Several requirements needed to be satisfied together.
No Traditional Employment or Self-Employed Income
Our customer was not receiving a salary from employment or an established business.
Although they owned a limited company, it had not started trading and therefore had no trading accounts or company profits that could support a mortgage application.
Instead, their income consisted of maintenance payments, benefit support and rental income from their property portfolio.
Many buy-to-let lenders require applicants to have a minimum level of personal earned income, sometimes around £25,000 annually, independently of rental income.
This meant that lenders relying on traditional employment or self-employment income criteria might not be suitable.
Capital Raising to Consolidate Credit Card Debts
Our customer also had several outstanding credit card balances that they wanted to repay using equity from their rental property.
Although their credit history was clean, the existing unsecured borrowing was significant relative to their personal income.
We needed to identify a lender that would consider capital raising for debt consolidation while assessing the customer’s financial position and ongoing commitments.
Consolidating credit card debt into a mortgage changes unsecured borrowing into debt secured against a property. It can also extend the repayment period, potentially increasing the total interest paid. These considerations were relevant to the advice.
Finding a Suitable Long-Term Fixed Rate
Our customer preferred a five-year fixed-rate mortgage to provide more predictable monthly outgoings and avoid frequent refinancing.
They also wanted to minimise upfront costs, ideally securing a product without a lender arrangement fee and with valuation and standard legal costs covered.
The challenge was finding a lender that could accommodate the income circumstances, capital-raising purpose and preferred product features.
What We Did
We reviewed the customer’s overall financial position, existing property portfolio and borrowing requirements before researching suitable buy-to-let mortgage lenders.
Assessed the Customer’s Income and Commitments
We examined the customer’s maintenance payments, benefit entitlement and rental income alongside their outstanding financial commitments.
We obtained supporting evidence, including maintenance payment information, benefit entitlement letters, rental income details and credit card statements.
This allowed us to establish the income available to the customer and understand how clearing their credit card balances would affect their ongoing expenditure.
Researched Lenders Without Minimum Earned Income Requirements
We researched the buy-to-let mortgage market to identify lenders that did not require a minimum level of personal earned income.
We also considered lenders’ approaches to rental income calculations and additional borrowing for debt consolidation.
An important part of this assessment was identifying lenders that could consider the application based on the rental property’s ability to support the proposed mortgage, rather than relying on a traditional salary.
We contacted the lender and its business development manager before placing the case to discuss the circumstances and relevant lending criteria.
Identified Accord as a Suitable Option
Our research identified Accord as a suitable lender for the customer’s requirements.
Accord’s relevant buy-to-let criteria accommodated the absence of a minimum personal earned income threshold and permitted capital raising for unsecured debt consolidation.
We also established that the available product included a five-year fixed-rate period, with no lender product fee, a free valuation and a free standard legal package.
These features matched the customer’s preference to reduce upfront mortgage costs while securing longer-term payment stability.
The Solution
We recommended a five-year fixed-rate buy-to-let remortgage with Accord.
The mortgage was arranged over 25 years on an interest-only basis, with borrowing equivalent to 50% of the property’s value.
The additional borrowing was used to repay the existing credit card commitments and cover the early repayment charge associated with refinancing the previous mortgage.
The selected product also provided the requested valuation and standard legal incentives, helping to limit the costs of arranging the remortgage.
As the mortgage was interest-only, the customer needed a strategy for repaying the outstanding capital at the end of the term. The agreed repayment strategy was the future sale of the property.
Consolidating unsecured borrowing into a property mortgage can reduce monthly payments in some circumstances, but it may increase total borrowing costs and puts the property at risk if mortgage payments are not maintained.
Why This Approach Worked
This scenario needed a lender whose buy-to-let criteria were suitable for a customer without traditional earned income.
Our customer had substantial property equity and an established rental income stream, but these factors alone did not guarantee that every lender would accept the application.
By focusing our research on lenders without minimum personal earned income requirements, we identified a product that accommodated their circumstances.
The low loan-to-value also meant that a substantial proportion of the property’s value remained as equity after the remortgage.
Importantly, the recommendation addressed both the customer’s existing credit card commitments and their preference for a five-year fixed-rate mortgage.
The Result
Our customer successfully completed their buy-to-let remortgage with Accord.
The additional funds enabled them to repay their outstanding credit card balances in full and cover the early repayment charge on their previous mortgage.
They secured a five-year fixed-rate mortgage, providing predictable interest payments over the initial fixed period.
The remortgage also simplified their borrowing arrangements by consolidating several unsecured debts into the mortgage, although those debts became secured against the rental property.
What This Case Shows
This Chorley buy-to-let remortgage case study demonstrates that a lack of traditional employment income does not automatically prevent an existing landlord from obtaining mortgage finance.
Different lenders assess personal income, rental coverage and capital-raising purposes in different ways.
In this case, understanding Accord’s lending criteria allowed us to identify a suitable option for a customer whose financial circumstances did not fit a standard employed or self-employed income profile.
It also demonstrates the importance of reviewing the implications of debt consolidation, particularly where unsecured borrowing is being transferred onto a mortgage secured against property.
Speak to Kerr & Watson
If you own a rental property and want to remortgage, raise additional capital or explore your options with non-standard income, Kerr & Watson can help.
We advise landlords with a range of financial circumstances, including those receiving rental income, pension income or other non-traditional income sources.
Contact Kerr & Watson to discuss your buy-to-let mortgage requirements and the options that may be available.
