Low-earning landlord raises capital against 2-flat block

Low-earning landlord raises capital against 2-flat block

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 a large, personal loan.

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 less than the standard £25k pa threshold of many lenders
  2. The property is classed as a multi-unit freehold block which most mainstream buy to let lenders avoid  
  3. Both flats share the same electricity and water supply – again, not acceptable to many lenders because this arrangement can lead to tenant disputes

We took the deal to intermediary only lender Keystone – a lender which is able to deal with the more complex scenarios. Keystone's underwriters take a common-sense approach, so after carefully considering this unusual scenario agreed to the following terms

 

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

 

SIGN UP TO OUR WEEKLY NEWSLETTER

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