Short term finance to pay off mortgage on HMO

The client is an experienced landlord and property developer. He was looking for a solution to repay a mortgage to a high street lender because the term was about to expire. The property on which the loan is secured is a 5-bed HMO in Oxford located near the hospital. It is let to a variety of medical personnel.

The client didn’t want another long term finance product (such as a buy to let mortgage) because he intended to sell the property in the very near future but was waiting until he had obtained planning consent on an adjoining property.

The best solution appeared to be a short term loan with no exit or early repayment charges after the first month. The client requested a term of just six months, and we agreed a facility with one of the challenger banks which offers this type of product at a very competitive rate. Here are the details of the deal:

Property value: £460,000

Loan amount: £232,000

LTV: 50%

Rate: 0.65% pcm

Term: 6 months interest only

Lender facility fee: 1.95% (£4,524)

Lender exit fee: Nil after first month

Monthly payments: £1,508 (first 3 months deducted from loan)

Rental income: £2,000 pcm

Gross yield: 5.3% pa

Consultant mortgage broker: Chris Longhurst

Contact number: 01732 471607


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