The client is a full-time landlord with two rental properties in the London Borough of Greenwich. Keen to expand her portfolio the client contacted us looking to raise funds.
She already had her eyes set on four buy to let properties, so needed to raise £400,000 in total to make the purchases.
The client had decided the best way to do this was to raise finance against one of her existing rental properties – an unencumbered 2-bed flat in a well sought after street.
After exploring several options the client selected an equity release product with no monthly repayments. Instead, the interest is serviced on a monthly basis, rolled up into the loan and settled at the end of the term.
This option was selected because
- The client did not want to make payments on a monthly basis
- The client’s provable income is very low – most lenders like to see £25k per annum. This particular lender does not require a rental income to service the debt
To repay the loan the client plans to sell the property or refinance it onto a buy to let mortgage when her provable income is higher from the additional rent.
We approached the lender, who was happy to take a first charge over the flat and offered the client the following terms:
Property value: £675,000
Loan amount: £400,000
Rate: 7.09% per annum
Term: 2 years
Mortgage payment: Nil
Repayment at end of 2 year term: £460,746
Rental income: £1,733 pcm
Lender arrangement fee: 2% (£8,000)
Consultant: Andy Elley, 01732 471644