A broker approached our Deal Placement team looking for a remortgage for a client who wanted to borrow more than most lenders’ rent to interest calculations would permit.
The client is a high net worth individual. He is self-employed as a property manager as well as owning five rental properties. He was looking to refinance two flats which he owns on single freehold.
Unfortunately, the flats are surrounded by commercial properties which many lenders do not like because they perceive them to be difficult to sell.
We approached a lender which was willing to take a view on the location of the property and has a product where the RTI is 125% @ at 4.59% (pay rate) allowing the client to borrow more than could be achieved using a standard notional rate calculation.
The lender in question can only be accessed directly via Mortgages for Business and a few other brokers.
Despite being a higher rate tax payer, the client elected to proceed with the remortgage in a personal capacity.
Here are the details of the deal:
Property value: £580,000
Loan amount: £400,000
Rate: 4.59% 5 year fixed
Borrowing vehicle: Individual
Term: 25 years interest only
Mortgage payment: £1,530 pcm
Lender arrangement fee: 2% (£8,000)
Rental income: £2,800 pcm
Gross yield: 5.8% pa