We were approached by a returning client, a mortgage consultant and part-time landlord, looking for finance on a three-bed semi-detached property to be purchased at auction.
The client contacted us well in advance of the auction in order that we could get her an agreement in principle.
We found a lender that was prepared to act quickly and offered 80% LTV on the property subject to valuation.
Unfortunately, the surveyor’s report estimated the rental income to be £100 pcm less than that expected by the client.
This meant that the property didn’t fit the rent to interest calculation needed to get the loan.
From previous experience, the client was absolutely certain that the valuation report did not reflect the potential rental value of the property.
Although time was running out, we sourced a different lender which offered similar terms and was happy to complete the deal within the 28-day auction timescale.
This time the valuation report showed a potential rental income of £75 pcm higher than our client’s estimate.
Just 10 days after the application had been submitted the case completed much to the relief of our client and an amazing achievement for a mainstream lender over the busy holiday season.
After discussing the most suitable option for her circumstances, the client decided to purchase the property personally rather than via a corporate structure.
Here are the details:
Property value: £240,000
Loan amount: £192,000
Rate: 4.5% for loan term (LIBOR + 3.91%)
Term: 25 years interest only
Mortgage payment: £731 pcm
Lender arrangement fee: 2.5% of loan amount (£4,800)
Rental income: £975 pcm
Gross yield: 4.9% pa