Colin Stevens is director of residential lending at Heritable Bank
“Tom is in a strong position in that his business is expanding and he is keen to capitalise on it. However, some lenders may have an issue with providing self-cert of income on a semi-commercial mortgage.
We would consider this case using our semi-commercial mortgage facility, combined with our affordability based self-cert option. The semi-commercial scheme is available for loan-to-values (LTVs) of up to 80 per cent, with the LTV available based on the residential element of the property. In this instance, we could lend up to £384,000, providing that the total LTV did not exceed 65 per cent.
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Tom would have to have a satisfactory credit record and provide bank statements to provide proof to the underwriter that Tom can manage his finances satisfactorily.
If the mortgage Tom wants has a pay rate similar to the amount on his existing mortgage and there is a satisfactory payment record, it’s likely that no references would be required.”
Thomas Reeh is chief executive at blackandwhite.co.uk
“As there is an existing barn there is a possibility of agricultural restrictions and this would require the use of a specialist lender. The best way for Tom to proceed would be to split the title into residential and commercial; he would then be able to command the best residential rates and have enough cash left to pay for the commercial part.
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Standard Life will lend up to 85 per cent on residential with self-cert, so if the residential part is worth £480,000, he could borrow £408,000. Since he only needed £330,000, this would suggest he has £270,000 as a deposit. He would then have £198,000 left to complete the purchase of the commercial part and this should only cost £120,000.
This scenario gives the Tom far more options than trying to find a lender that will be happy to lend on a part commercial title.”
igroup will lend on there Gem 4 product up to 60 per cent LTV on semi-commercial so in essence this would work on a fixed rate of 6.49 per cent unless any agricultural restrictions.
Tom Guest is a mortgage consultant at Mortgage Options
“Tom is technically restricted to a commercial mortgage, as the purchase includes elements of operating his business. Unfortunately, most commercial lenders won’t differentiate between the residential and business proportions of the purchase. In other words, one rate will apply.
Omitting proof of his income will mean looking away from high-street banks and more towards a specialist commercial lender to accommodate this. As a result, he can expect the rate of interest charged and set up costs to be higher, being typically 1.5 to 2 per cent above Base Rate.
With the amount of deposit available the purchase should be straightforward, but as with any kind of commercial lending it would be subject to the strength of the proposal itself and Tom’s credit history.”
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