A secondary school teacher, living with his partner, approached us for help in sourcing finance for his former home which he was letting out with the permission of the lender on a one-year “consent to let” basis. This consent was due to expire, so he was looking to remortgage onto a formal buy to let rate and release some equity so that he and his partner could raise a deposit to buy a bigger home.
This fairly common scenario is classed as a consumer buy to let transaction because the client has become a landlord as a result of circumstance rather than through their own active business decision. Because of this, the regulations require lenders to impose stricter affordability tests and request more paperwork. In effect the transaction is underwritten in the same way as a residential mortgage.
We approached an intermediary only lender which offers both residential and buy to let rates, so was happy to accept the application. The following terms were offered:
Property value: £475,000
Loan amount: £330,000
Rate: 3.18% 5 Year Fixed
Term: 20 years interest only
Lender arrangement fee: 2% (£6,600)
Borrower: Individual applicant
Mortgage payment: £880 pcm
Previous monthly payment: £1,100 pcm
Rental income: £1,600 pcm
Gross yield: 4.2% pa
Consultant: Paul Martins, 01732 471616
If you are looking for similar finance, do get in touch to find out which options are available to you.
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.