Will lenders consider people receiving PHI payments

SuzieSue

My friend is on long term sick leave with her employer. Fortunately, she had Permanent Health Insurance with her employer and is receiving 75% of her salary (less state benefits) which will continue until she is 65. She has a chronic condition and so is unlikely to be able to go back to work.

Are there any lenders who will consider her for a mortgage?

Thanks for your help

ACG

I know there is at least 1 lender who will do it. I seem to recall someone i used to work with placing a Mortgage for someone in the same situation.

To be honest i imagine there will be a few lenders who will look at it. I would get a copy of the contract and any paperwork since the claim started and speak to a broker. I dont think there will be a major issue assuming everything else is ok but some lenders may make the process difficult.

kingstreet

I would imagine loan to value and credit history will be the initial obstacle, then the issue of income source raises its head.

I'd put it in the hands of a broker who'll be best placed to find the right lender for this, without the potential for pointless speculative credit searches.

SuzieSue

Thanks a lot for the replies.

So it looks like most mainstream lenders will consider it to be an issue. It's strange as her income is guaranteed until she is 65 (and will increase by 3% per year) so I would have thought that lenders would consider it to be a positive.

She has no issues with LTV or credit history. It is for a buy to let and she already has a mortgage on her home and on another buy to let which she took out before she went on long term sick leave.

kingstreet

In which case, as long as the LTV is 75% or less and the rental income is 125% of the monthly mortgage interest, assuming a rate of perhaps 6%, I think she should be okay.

I'd still use a broker though. The better BTL lenders/products are broker-centred and not available direct.

ACG

There are BTL lenders with no minimum income requirement so you should be fine.

The problem with some BTL lenders is they say EARNED income. Insurance is not an earned income so they may decide to be awkward.

Im still convinced your friend will get a mortgage but as before, some lenders could be awkward about it.