Buy to let remortgage for end-of-terrace house owned by family trust

Buy to let remortgage for end-of-terrace house owned by family trust

12.04.17 | Written by: Paul Keddy

We were approached by a broker whose client, a business development manager for an insurance company, was looking to refinance one of his rental properties.

The property in question is a two-bed end-of-terrace house in Hampshire, which had recently reached the end of its initial mortgage term. 

Now paying the lender's higher reversion rate, the client was keen to refinance the property to bring payments down. The client had already contacted his own lender, but had been declined as he no longer met its affordability criteria.

Although it would not normally be difficult to find another lender under these circumstances, the property in question is owned in a family trust account, something the client's broker had not dealt with before. Although there is a very limited market for this type of lending, which does heavily restricts the choice of possible lenders, Mortgages for Business has placed deals for similar enquiries in the past.

We took the case to a specialist lender, with whom we have direct access to. Satisfied with the security in the form of a personal guarantee and a legal charge over the freehold property, the lender offered the following terms:

Property value: £350,000

Loan amount: £206,000

LTV: 58%

Rate: 3.24% (2.99% + Bank Rate)

Term: 25 years interest only

RTI calculation: 125% @ 5.5%

Mortgage payment: £ 556 pcm

Lender arrangement fee: 1.25% (£2,575)

Rental income: £1,295 pcm

Gross yield: 4.4 % pa

Consultant: Paul Keddy, 01732 471655

ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.