Case Study –Refinancing a Complex Buy-to-Let With Family Occupancy and an Outstanding Bridging Loan

The Situation

A client approached Henry Dannell to refinance a buy-to-let property jointly owned on a 50/50 basis with their elderly mother, who was not working.

The client was an entrepreneur within the recruitment sector, but the ownership and occupancy arrangements meant this was not a straightforward buy-to-let refinance.

The property was being rented to a family member at below-market rent. In addition, there was an outstanding bridging loan secured against the property that needed to be repaid as part of the refinance.

The Challenge

Several aspects of the case reduced the number of lenders able to consider the application. Firstly, the property was jointly owned with the client's elderly, non-working mother. Any prospective lender therefore needed to be comfortable with both applicants and the wider ownership structure. Secondly, the property was occupied by a family member at below-market rent. This meant the arrangement fell outside the criteria of a number of conventional buy-to-let lenders and required careful consideration of how different lenders would assess the tenancy. There was also an outstanding bridging loan secured against the property. Some lenders would not accept the existing short-term finance, while others could treat repayment of the bridge differently within their underwriting criteria. This further reduced the available lender pool. Taken together, the case required a lender able to consider the ownership structure, family occupancy and existing bridging finance as part of the same transaction.

The Solution

Rather than approaching lenders whose standard criteria were unlikely to accommodate the circumstances, we focused our research on those able to consider the transaction in its entirety. We identified a lender whose criteria could accommodate the joint ownership, family occupancy and existing bridging loan, and structured the application around the particular circumstances of the case. Once the appropriate lender had been identified and the transaction clearly presented, the application progressed from submission to full mortgage offer within a matter of days. The result was a successful refinance despite several aspects of the case falling outside conventional buy-to-let lending criteria. The case demonstrates the importance of lender selection where a transaction involves multiple layers of complexity. When ownership, occupancy and existing borrowing do not fit neatly within standard criteria, understanding how different lenders will interpret the complete position can be as important as the underlying financial circumstances. Please note: A mortgage is secured against property. The property may be repossessed if repayments are not maintained. Buy-to-let mortgages and consumer buy-to-let arrangements may be subject to different regulatory treatment depending on the circumstances. Mortgage availability and lending are subject to individual circumstances and lender criteria.