Landlord funds refurbishment with further advanced to avoid ERC’s

The client is a full-time account manager for a software company who also owns six investment properties.

He wished to finance the refurbishment of one of his properties - a three-bed flat in a converted house located in Greater London.

The client’s existing £200,000 mortgage on the property was still within the initial term meaning that he would have to pay considerable early repayment charges (ERCs) if he remortgaged.

So we talked to his lender and negotiated a further advance which meant that the client was able to avoid paying any lender arrangement fees, legal fees and valuation fees.

Here are the details of the deal:

Property value: £365,000

Further advance: £37,000

LTV (on further advance): 10%

Total LTV on the property: 65%

Rate: 4.09% 2 year fixed

Term: 11 years interest only

Borrower: Personal name

Lender arrangement fee: Nil

Further advance payment: £126 pcm

Rental income: £1,350 pcm

Gross yield: 4.4% pa

Consultant: Nick Helm, 01732 471608

4th May 2016