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Keep it in the family with Furness: Regulated Buy-to-Let case study

Who did we help?

Lynn has a flat in Glasgow and wanted her two grown-up sons to move in.

What did she need?

Lynn’s mortgage deal on her flat in Glasgow was up for renewal and was trying to find a lender that would allow Lynn’s two sons to rent it from her.

“It seemed like such a good idea to rent to people I know and trust, but after being turned away by my existing provider - which was one of the UK’s biggest banks - I discovered there were only three providers in the whole of the UK that offered family buy-to-let mortgages.”

Why were they facing challenges?

Securing a mortgage on a property that your client plans to rent out to an immediate family member can be difficult.

Lenders assume most people won’t charge their relative the full market rate and this is considered to increase the risk for both the borrower and the lender.

Due to the associated risk, you can’t get an ‘unregulated’ buy-to-let mortgage anywhere in the UK for this type of scenario. In these circumstances, the solution is a family buy-to-let mortgage, regulated by the Financial Conduct Authority, however most lenders steer clear of this type of mortgage altogether.

There were only three providers in the whole of the UK that offered family buy-to-let mortgages and one of these doesn’t lend in Scotland where Lynn’s flat was situated. This left her with two options.

“The bigger high-street brand said they would be able to consider the application but as I was 60, they required an enormous amount of information - including detailed pension forecasts. It all felt completely overwhelming.”

How did we help?

Our flexible lending criteria allows us to assess mortgage applications on a full affordability basis using earned income up to the age of 69 and in this instance, Lynn wanted the term to take her to her expected retirement age of 67.

Our experienced underwriters were therefore able to review Lynn’s eligibility on the basis that the loan represented 60% LTV and she was able to afford her own mortgage, the Buy-to-Let mortgage and her usual outgoings using her own income. We did not factor in any of the rent paid by her sons.

“I was very impressed that a smaller lender based in Cumbria could help me when no-one else could.”

Could our Regulated Buy-to-Let mortgages help one of your clients? Give our Furness for Intermediaries team a call on 0800 988 1561 or contact your Business Development Manager.

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