First time buyer 90% new build borrowing from lender accepting sizable commission income
First time buyers purchasing new build house at 90% borrowing with full gifted deposit
Lender sought who would accept sizable commission income in affordability assessment
£490,000 property value with borrowing of £441,000
Our clients were First Time Buyers looking to buy an ideal new build house as their first home with an element of financial assistance from their family.
What was needed?
The clients had a full gifted deposit from their family of 10% of the value of the £490,000 property, so the couple needed a 90% loan of £441,000 on the new build house they had set their hearts on.
(A gifted deposit is when a client receives an amount of money, usually via family, to use as a deposit on a property. The money is not a loan and need not be repaid. As the person giving the deposit is given no legal interest in the property, proof that these monies are a gift and not a loan needs to be evidenced to the lender.)
What was the challenge?
The lender choice was limited at the 90% borrowing level for a new build property as most lenders are only willing to offer a maximum of 85% borrowing on a new build property. This is because lenders are concerned about the reduction in property values of new build properties in the early years.
In addition, one of the client couple had earnings with a low basic salary but with relatively high commission payments. This meant a lender needed to be found that would take account of the highest possible commission income as well as basic salary to lend at 90% on a new build house.
How we provided the solution
Mike Brooker, Associate Director, discussed the clients’ needs and mortgage goals with them to understand precisely what was required.
He researched the mortgage market and spoke to his lender contacts to discover which lenders would be willing to offer 90% lending on a new build property taking account of variable commission income.
Mike approached a lender who agreed to consider a high proportion of the client’s commission payments because a 2-year track record of these commission payments at the current levels could be evidenced by the client.
The lender was able to make the assessment that the client wasn’t being significantly impacted by the Covid crisis and the lender agreed to use a higher proportion of commission income in the affordability assessment.
The clients were overjoyed with the outcome as they can now move forward with purchasing their new build first home.
What was the rate?
The rate was 5.18% fixed for 5 years.
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