Day-Rate Contractors Requiring a Residential Mortgage and Limited Company Buy-To-Let

Both our clients are day-rate IT contractors, who wanted to purchase a £1m residential property, with a relatively modest 15 per cent deposit. They also wanted to sell their existing property to their own limited company.

As our clients are day-rate contractors, we needed a lender who would take their day rate into account when calculating how much they could afford to borrow. Not all lenders are prepared to do this.

Numerous lenders were sourced but this was a complex case as we needed to arrange two mortgages, one on a residential basis and the other one a buy-to-let limited company purchase. We also needed lenders who understood how day-rate contractors are remunerated and to lend to them on that basis. Finally, the residential mortgage was a substantial size, with a relatively small deposit.

Key requirements: –

• A lender happy to agree to the sale of the existing residential property to the clients’ limited company using a buy-to-let mortgage. • A lender who understands how day-rate contractors are paid. • A lender who would lend 85 per cent of £1m for the residential property purchase.

After sourcing the mortgage market, we identified two lenders – one who would agree to lend £850,000 for the residential purchase, the other £375,000 for the limited company buy-to-let.

The application process: To support the mortgage application, the clients provided details of their fixed-term contracts, along with evidence of their identities. We were delighted to inform them that two lenders had issued formal mortgage offers for the full amount requested at competitive rates.

• Residential property value: £1m • Loan amount: £850,000 • LTV: 85% • Rate: 2.63% fixed for two years • Lender product fee: £995 added to the loan • Monthly payment: £3,893

• Buy-to-let property value: £500,000 • Loan amount: £375,000 • LTV: 75% • Rate: 3.39% fixed for five years • Lender product fee: £3,995 added to the loan • Monthly payment: £1,071
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