Any of you who know me well (or have read this blog for any length of time) know that I love nothing more than to solve property problems, and that's exactly what led Lesley to write to me.
She had a £100,000 lump sum and a property priced at £150,000 which she wanted to buy. She also had sufficient income from her ESA and PIP payments to afford a £50,000 mortgage. What she didn't have was a lender willing to give her that mortgage based on her total income.
She had previously obtained a mortgage from HSBC, but they were only willing to look at her ESA payments, disregarding the PIP entirely, leaving her under the minimum income requirement for their mortgages.
She dropped me a line through the blog's contact page (you can do the same right here) to outline her circumstances.
She signed off with: "You like a challenge. How about this one?"
Thankfully, we had actually dealt with a very similar query in the not-so-distant past and had a lender we knew we could approach straight away. Nat West will lend on 100% of your benefit income and will consider both types of benefit mentioned above.
Was it easy to find this information out? Well, it's straightforward enough, but involves a bit of legwork - really best done by a good intermediary or broker. Get in touch and we'll pass you on to ours. The good ones will not charge you a fee for this service and they have access to all the lenders in the market.
They have access to a full database of lenders and their lending criteria. Different banks have different lending criteria - some will consider 100% of benefit income; some will take into account 50% of the benefit.
This information changes all the time, so it is something that does need to researched anew with every case. The picture is also slightly different depending on the benefit you are in receipt of - for example, working tax credits or child tax credits received in addition to your wages/salary or working income.
The welfare scenario has changed in recent years; whereas the authorities used to award certain benefits indefinitely, most are now awarded for a period of 2 years and are then subject to review. However, Lesley had previously been in receipt of her benefits on an indefinite basis, which strengthens her claim.
The reduced certainty of future income has made some lenders adjust their criteria.
Based on the information gleaned from the database and a fair few phonecalls to ensure the info we had was accurate and up to date, we were then able to make a calculation of affordability, based on Lesley's financial picture.
To paint this picture, we asked her to provide:
Together with information about any credit commitments - for example loans, credit card payments, etc - we were then able to obtain a decision in principle; basically, a document in which the lender agrees based on the evidence provided that they should be able to lend you a certain amount before you finalise your property purchase.
I'm delighted to say that Lesley has now found a property she wants and is moving forward in the process to make an offer and buy. This case is a residential purchase - but what if you were in a similar situation and wanted to secure a buy-to-let mortgage?
It's a common misconception that all lenders have a minimum income requirement for buy-to-let mortgages. Many still ask for the minimum £25,000 annual income, however Bank of Ireland and BM Solutions no longer have this requirement, so this opens the market up to investors on lower incomes. You do of course still need your deposit.
Perhaps you have a lump sum you'd like to invest in order to create an income for yourself. Obviously, the resulting income from the rental property is likely to have an effect on your benefits - but depending on your circumstances, that may be agreeable to you.
If you are having trouble obtaining a mortgage (whether residential or buy-to-let) or indeed have any other questions or issues relating to the Belfast property market that you'd like me to help you with - you know what to do!
Drop me a line to firstname.lastname@example.org, use the contact form on this site, or indeed pop into PropertyLink NI on the Lisburn Road. I'll be glad to rise to the challenge.