BTL mortgage for new SPV with large gifted deposit from overseas

BTL mortgage for new SPV with large gifted deposit from overseas

01.03.17 | Written by: Gareth Richards

We were approached by a broker whose client was looking for finance to purchase his second investment property, having bought his first buy to let six months previously. He had had an offer accepted on a 4-bed semi, built in 1990 which was already tenanted on a single AST to a family for £2,500 pcm. The vendor was looking for a quick sale.

The client, who is a home-owner, also runs a furniture business which only generates a small annual profit. His father, who lives in India, had agreed to provide the majority of the deposit for the purchase.

Having taken advice from his accountant, the client had set up a new SPV limited company through which to make the purchase which also meant he would be able to achieve a higher loan amount than borrowing personally.

We took the deal to a lender which we felt had the right criteria and could process the case quickly. We helped the broker collate all the necessary paperwork and the application was duly submitted. For the most part it progressed smoothly. There was a slight delay with the gifted deposit; the transfer of such a large sum necessitated additional anti money-laundering checks. With no other offers on the table, the vendor decided his best option was to accept the delay and the entire deal was completed in 10 weeks from initial enquiry to completion. Here are the details:

Property value: £780,000

Loan amount: £490,100

LTV: 63%

Rate: 3.79% five year fixed

Term: 20 years, interest only

RTI calculation: 125% at 3.79% (pay rate)

Borrower: SPV Ltd Company

Lender arrangement fee: 2% added to the loan amount (£9,802)

Mortgage payment: £1,547 pcm

Rental income: £2,500 pcm

Gross yield: 3.9% pa

Consultant: Gareth Richards, 01732471627

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