Overcoming an adverse credit history to invest in three buy-to-let opportunities

Overcoming an adverse credit history

Loan Amount:
£281,250

Property Value:
£375,000

LTV:
75%

A client looking to invest in buy-to-let assets came to us through a broker. This case presented a number of potential challenges we had to overcome to ensure funding could be issued and covered.

The investment consisted of three individual apartments in the same building, but the rental incomes varied between them. On top of this, a few financial issues emerged during the assessment process.

With a range of potential hurdles in place, we had to dig deep into the details to ensure funds could be issued as securely as possible, with long-term planning in place.

Looking beyond short-term financial blips

During the background checks, it emerged the client had historic adverse credit issues. Additionally, multiple missed payments were on the record. This usually wouldn’t bode well for investors in need of funding, but our dedicated underwriter, Wayne Fitzpatrick, looked closer and noted the client’s record had been clean for the last two years or so.

The client also already had two investment properties in their portfolio, which provided the reassurance needed to move forward.

Three buy-to-let properties in the same building were being purchased, but the apartments varied in what they offered. Two were tenanted and the third flat was being used as a holiday let.

To ensure there would be no complications from these differences, Wayne raised a query on the holiday let flat with the valuer involved. They confirmed the holiday let was already factored into the overall valuation and was permitted in the building’s usage. This assured us once again there was no concerns in moving forward.

Knowing what to examine where complications arise

When buying multiple flats or units in a building, variation in values and outlooks can occur. This can complicate a deal but with our many years’ worth of expertise, we know exactly what to investigate to keep the ball rolling and avoid delays in funding.

This may prove to be crucial for investors as the BTL market shows no signs of slowing down. Room rents in London recently hit an all-time high while in some parts of the UK, rents are nearly 30% higher than what they were prior to the pandemic.

Renters are desperate for more supply and there could be opportunity for new entrants to the market. Some landlords may sell up over the coming months due to worries about state intervention, but this may be short-sighted.  To find out why BTL investments could still be worthwhile, even with the current state of the economy, have a read of this blog.

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