Consulting with doctor Vida
Louisa Sedgwick is director of sales, mortgages, at Vida Homeloans
Q: Dear Dr Vida, my client has moved to France for employment reasons. He originally lived in London, and has rented his residential property out whilst living abroad.
He is now looking to purchase another buy-to-let property and has found an ideal flat with a good rental yield.
However, he is struggling to find a lender who will accept both an expat buy-to-let mortgage and an ex-local authority flat with balcony access.
A: In recent years, the majority of expats have had to go through large, mainstream offshore banks in order to get the mortgage they require.
However, the strict criteria which these banks impose when it comes to the types of property they will consider can be a challenge to both clients and brokers.
The good news is that there are now more specialist lenders who are expanding into the expat market, meaning greater flexibility when it comes to property criteria.
Researching these specialist lenders who lend to expats is a great first step in finding those mortgage providers who will be more open to accepting an ex-local authority flat with balcony access as well.
Q: My client is an IT contractor looking to purchase his first residential home and has a 20% deposit available. He has worked in the IT industry for four years, however he began his first self-employed contract only 3 months ago.
The contract is due to last for a year, however, I am having difficulty placing my client due to the limited time he has spent as contractor, as well as the majority of lenders requiring a contract renewal before lending.
A: This is a common issue and there are specialist lenders in the market who have flexible criteria which may benefit your client.
Greater product innovation means your client should be able to find a mortgage lender who would be prepared to consider him without proof of contract renewal as well as limited contracting experience, if they already have industry experience.
These lenders are likely to also calculate his income, despite the fact he won’t have filed a tax return, based upon his weekly contract rate multiplied by 46 weeks, less applicable expenses.
Q: I have a client who is aged 24 and a first-time buyer. She has saved up a 5% deposit and her aunt has offered to gift her an additional 10%.
However, 14 months ago, she defaulted on a mobile phone payment, which is still unresolved.
Do you know whether she would be able to get a mortgage despite this and the gifted deposit not coming from an immediate family member?
A: Your client can benefit from the diverse criteria offered by specialist mortgage lenders.
While some mainstream mortgage lenders may only accept gifted deposits from those who fall within their immediate family member category, there are now a range of specialists who will consider deposits coming from aunts, uncles, step-parents, guardians etc. as well.
In addition, although your client’s mobile phone payment default remains unsatisfied, some specialist lenders will take into account the date the default was registered, rather than the date it was resolved.
Q: My client is divorced and looking to buy her council property. Her husband left some time ago and moved abroad without future contact.
She was left her with two young children and no maintenance support.
She previously had a good credit rating, however, her circumstances left her unable to work full time and with expenses to pay.
As a result, she defaulted on some of her debts, as well as incurring more costs in the divorce process and in searching for her husband.
A: With a raft of specialist lenders now operating in the market, some will be willing to lend up to 95% of the discounted council house purchase price, as well as taking into account any potential impaired credit over two years old.
This will help your client, as they may then be able to get a mortgage with a low interest rate for a fixed-term, dependent on each lender’s criteria.
This will provide your client with the financial stability she requires in order to buy her property.
Q: My client has been self-employed for three years, but less than 12 months ago he changed his business from being a sole trader to a limited company.
As a result, he has been turned down by high street lenders when applying for a 90% loan-to-value mortgage to purchase a new build property.
A: Self-employed workers have traditionally been under-served by the mortgage market. However, lenders, in particular specialists, are now beginning to cater for the needs of this sector of the labour force.
Each lender will have different requirements, but some will not have an issue with your client’s change from sole trader to limited company, if he has at least 12 months’ evidence of previous work experience as a self-employed individual.
Your client should also be able to find a lender who is willing to offer an 85% LTV and accept a 5% builders deposit, as an alternative to the 90% LTV he is looking for.