Experienced landlords, both longstanding clients of Mortgages for Business, contacted us looking to raise capital on one of their unencumbered rental properties.

The property they were hoping to raise funds against is a six-bed HMO let to students in West London.

The couple had planned to wait until the end of the year to remortgage, but had been spurred on with the threat of stress tests tightening in the coming months.

The couple were aware that if the rent to interest cover calculation increased, the amount they would be able to borrow would decrease.

Although not impossible, we knew this case would only work with one of the specialist lenders because of its complex nature, namely:

• The couple were looking for a 20 year term, which would take them into their 90s
  
  
• Not all lenders accept HMOs

• Not all lenders accept properties let to students

Fortunately we have access to an intermediary only lender which, after some negotiation offered the following terms:

Property value: £540,000

Loan amount: £400,000

LTV: 73%

Rate: 4.59% 5 year fixed

Term: 20 years interest only

Borrower: Joint application in personal names

Lender arrangement fee: 1.5% (£5,625)

Mortgage payment: £1,451 pcm

Rental income: £2,655 pcm

Gross yield: 5.9% pa

Consultant: Chris Longhurst, 01732 471607