Helping a single-parent FTB reach 95% LTV with three months in a new role & two income streams

The Situation 

This was a difficult case for many lenders because several challenges stacked up at once. As a first-time buyer with a 5% deposit, he needed 95% LTV. His new role was only three months old and in a completely new industry, which many lenders see as too short a track record to rely on. And as a single parent, affordability was already tight.

The sole trader income was the key to making the mortgage affordable, but it needed a lender willing to count it alongside a full-time job. On his employed income alone, the loan-to-income (LTI) multiple would have been nearly 6x but with both incomes it came in below 5x. There was also a historic default on file, although it was more than five years old and his recent payment history was exceptional. He needed a lender who would accept three months in a new job after a complete change of industry, count a second income, lend at 95% LTV, and ignore the long-gone historic credit blip, all in the same case.

Our Solution

The applicant was eligible for our Premier Product offered within our Core Residential range: a £279k loan against a £294k property (95% LTV) over 36 years, completing 8 weeks after application. By counting both of the client’s incomes, the LTI came in below 5x, so the case qualified for Core pricing. This gave him the lowest rates we offer at 95% LTV, making the loan affordable for the client.

Three parts of our criteria made this work. We only need three months in a current role, regardless of what the borrower was doing before, so his new job and change of industry were not a barrier and we accepted that income at 100%. We will take a second income where it has been held for at least 12 months and the combined working hours do not exceed 60 a week. He had run his sole trader work for over ten years alongside a full-time job, and worked under 60 combined hours each week, so we used both incomes for affordability. And our minimum deposit is just 2.5%, so his 5% was more than enough.

The historic default was more than five years old and, with an exceptional recent payment profile, it did not affect our decision.

The Benefit

What makes this case stand out is how our criteria work together. Many brokers know we accept low deposits, but not many might be aware that we count a new job after just three months even after a complete change of industry, that a second income can be used alongside a full-time role once it has a 12-month history, and that including all of the client's income can lower the LTI enough to move a case into our Core range.

Being a first-time buyer does not change our approach either. We lend at 95% LTV to first-time buyers and home movers alike, and we go up to 97.5% LTV, including for remortgages, on our Extra range.