Landlord with low income purchases 5-bed HMO via SPV Ltd Co

Landlord with low income purchases 5-bed HMO via SPV Ltd Co

28.02.17 | Written by: Gary McKenna

We were approached by an existing client - a professional landlord operating via a SPV limited company structure, seeking to raise finance for the purchase of a five-bedroom HMO in West Sussex.

Although operating several buy to lets already and able to provide a large deposit, the client had an income of just £10,000 outside of rental income - far below the £25,000 income that many lenders require.

The client’s options were further restricted by the use of a limited company structure. While there can be tax and affordability benefits to borrowing via a limited company, many mainstream lenders do not deal with limited company applicants as they do not have the underwriting processes in place to operate in this market.

We took the case to a specialist lender which only caters to experienced landlords. This particular lender does not impose any minimum income requirements and accepts SPV limited companies with up to four directors. Satisfied with the client’s experience and the rental valuation, the following terms were offered:

Property value: £355,000

Loan amount: £227,760

LTV: 64%

Rate: 3.69% 2 year fixed

Term: 25 years interest only

Borrower: SPV Ltd Company

Rent to Interest Calculation: 125% @ 5.5%

Mortgage payment: £711 pcm

Lender arrangement fee: 1.5% (£3,416)

Rental income: £1,350 pcm

Gross yield: 4.5% pa

ConsultantGary McKenna01732 471652

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