Our client is a teacher who also owns a handful of rental properties. He approached us for help in securing finance to buy a run-down 4-bed detached house in a popular university town. Because the house needed refurbishing before it could be let out, it was not suitable for a buy to let mortgage, so we arranged a bridging loan in order that the client could carry out the work.
He spent £20k of his own funds making the house habitable and then found a family who were prepared to rent it for £1,850 per month.
Six months down the line, with the tenants in situ, the client approached us again to help him refinance onto a more affordable, long-term buy to let mortgage. Even though the refurbishment had only taken three months, he waited longer in order to secure a better rate, as most lenders will not allow remortgages within six months of purchase.
We found a lender who was willing to help and their surveyor valued the property at £50k more than the purchase price.
Here are the details of the deal:
Purchase price: £450,000
Short-term loan amount: £315,000
LTV: 70%
Rate: 0.73% pcm bridging loan
Term: 8 months interest serviced
Lender arrangement fee: 1.95%
Property re-valued at: £500,000
Refinance amount: £360,000
LTV: 72%
Rate: 3.99% 2 year fixed buy to let mortgage
Term: 15 years interest only
Lender arrangement fee: £995
Completion date: August 2014
Consultant: Jeni Browne, 01732 471647
