Restaurateurs remortgage mixed-use property to raise capital

The clients, a married couple, are directors of a trading limited company which owns a mixed-use property in Kent consisting of a restaurant on the ground floor and a three-bed flat above.

The couple currently run the restaurant themselves and rent out the flat. They also own two other buy to let properties personally.

They approached us for help in remortgaging the mixed-use property so that they could give up being restaurateurs and concentrate on being full-time landlords.

Their plan was to let the restaurant and raise capital to purchase more buy to lets.

Our challenge was to find a provider that would:

  • Lend to the business which only generates a small profit

  • Accepts semi-commercial property as security

  • Doesn’t underwrite based on the directors’ income.

We approached a specialist commercial lender and after some negotiation we were able to agree the following deal:

Property Value: £500,000

Loan amount: £375,000

LTV: 75%

Product: 6.55% life time tracker

Term: 25 years interest only

Rent: £3,100 pcm (restaurant & flat combined)

Gross yield: 7.4% pa

Mortgage payments: £2,047 pcm

Lender arrangement fee: 1.7% (£6,375)

Consultant: Beckie Pepperrell

Consultant tel: 01732 471602

Consultant