Landlord earning less than £25k pa raises capital against multi-unit

Landlord earning less than £25k pa raises capital against multi-unit

01.08.17 | Written by: Andy Elley

An existing client called us looking to capital raise against an unencumbered multi-unit, currently tenanted to professionals. The client is a full-time landlord with a small property portfolio which generates a personal income of £14k per annum.

The property in question is a converted townhouse comprising of two self-contained flats.

The client wanted to raise just under £94k to repay his parents who had gifted him the property a year ago.

There were three main challenges with placing the case, which meant a specialist lender would need to be approached.

  1. The client’s income is solely from rent and under the standard £25k threshold of many lenders
  2. The property is a multi-unit
  3. Both flats share the same electric/water mains – something lenders tend to steer clear of

We took the deal to intermediary only lender Keystone – a lender which is able to deal with the more complex scenarios. Happy with the client’s experience the following terms were offered. 

 

 

Property value: £125,000

Loan amount: £93,750

LTV: 75%

Rate: 4.19% 5 year fixed

Term: 25 years interest only

Lender arrangement fee: 2% (£1,875)

Borrower: Individual applicant

RTI: 145% @ 4.19%

Mortgage payment: £334 pcm

Rental income: £1,300 pcm

Gross yield: 8.5% pa

Consultant: Andy Elley, 01732 471644

 

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