The Client
The clients had a large portfolio of properties in their local area and wanted to raise funds for ongoing purchases and building projects they had lined up. Both applicants were mainly self-employed, with one also having a smaller income from employment.
The Scenario
Most of their portfolio was on fixed-rate buy-to-let mortgages, so raising funds by remortgaging any of those properties would have triggered early repayment charges. Their own residential home, however, was unencumbered with no mortgage at all – making it the most cost-effective route to raise the capital they needed.
The Solution
After gathering the clients’ self-employed tax documents covering the past three years, we carried out a detailed affordability assessment to establish how much they could borrow. Initial figures looked strong, but many lenders also take a client’s existing buy-to-let mortgages into account when assessing a residential application, even where the rental income comfortably covers those mortgages. Some lenders also cap the number of investment properties an applicant can hold before they will consider a further residential loan.
We sourced a lender comfortable with the client’s full portfolio picture, at a competitive rate. The application went from submission to offer in just two weeks.
The Outcome
The funds were released shortly after offer, giving the clients the capital they needed for their ongoing purchases and building projects. We subsequently helped them secure an additional mortgage for the purchase of another buy-to-let property, funded in part by the capital raised against their residential home.
Frequently Asked Questions
Can I raise funds against a residential property I own outright?
Yes, an unencumbered residential property is often the most cost-effective way to raise capital.
With no existing mortgage to disturb, there is no early repayment charge to factor in, unlike remortgaging a property already on a fixed rate.
Why do lenders look at my buy-to-let mortgages when assessing a residential application?
Lenders want to see your full financial picture, not just the property you are borrowing against.
Even where rental income comfortably covers your buy-to-let mortgages, some lenders factor those commitments into their residential affordability assessment, which can reduce what they are willing to lend.
Do lenders limit how many investment properties I can own?
Some do, yes.
Certain lenders set a maximum number of mortgaged properties they will lend to a portfolio landlord, regardless of how strong the application otherwise looks, so matching the case to the right lender matters.
How does being self-employed affect a residential remortgage application?
You will usually need two to three years of tax documents to evidence your income.
Once that is in place, self-employed applicants with a portfolio background are assessed on the same fundamentals as anyone else – affordability, credit history and lender fit.
If you have any questions relating to raising funds against a residential property, contact us today to speak directly with one of our Mortgage Advisors.
UK Mortgage Broker is a whole-of-market broker directly authorised and regulated by the Financial Conduct Authority. Your home may be repossessed if you do not keep up repayments on your mortgage.
Call: +44 1628 969 500
Email: info@uk-mortgagebroker.co.uk
Related Pages
- Self-Employed Mortgage – how lenders assess self-employed income for mortgage applications
- How Lenders Actually Check Your Income – what counts and what does not when a lender assesses affordability
- Remortgage UK – when remortgaging makes sense and how the process works
- Residential Mortgages – whole-of-market advice for homeowners across the UK