Purchase of student HMO by landlords with low income

Two directors of an SPV limited company approached us looking to purchase a four-bed HMO for letting to students. The directors are both full-time landlords with over ten rental properties between them.

Although profitable landlords, the pair had recently carried out some refurbishment works on a few of the properties in their portfolio and offset the costs against the company’s accounts.

This had caused their income for the recent tax year to be under £25k – something most lenders will not accept.

The clients were also keen to secure a five year fixed rate to protect them from potential rate rises in the near future.

Our own lending brand Keystone Property Finance was able to assist in this instance. Happy with the company’s experience in letting rental property and accounts from previous years.

The following terms were offered:

Property value: £450,000

Loan amount: £337,500

LTV: 75%

Rate: 4.59% 5 year fixed

Term: 25 years interest only

Borrower: SPV Ltd Co

Lender arrangement fee: 2% (£6,750)

Mortgage payment: £1,315 pcm

Rental income: £2,800 pcm

Gross yield: 7.5% pa

Lender name: Keystone Property Finance

Consultant: Paul Martins, 01732 471616

Consultant