Landlord with adverse credit buys two cottages from her own Ltd Co

We were approached by a Scottish broker looking for finance for his client who is self-employed and also owns several rental properties.

Unusually, the client wanted to buy, in her personal name, two semi-detached cottages which she already owned in her trading limited company. She was doing this for personal reasons on advice from her accountant.

There were several challenges to this case including:

• The client is the vendor and the purchaser which makes the transaction linked – not many lenders will touch these applications.

• Some lenders will not accept properties located so closely together because they view the risk to be higher

• The client has a CCJ on her credit profile resulting from a messy dispute with a business creditor

• The rental income was insufficient to meet most lenders’ income cover ratio

Keystone was happy to offer terms from the Solutions Range because it accepts linked transactions and borrowers with some adverse credit.

The valuation report suggested that the properties would be good security, so Keystone agreed that the client could use some of her excess income from her business to make up the rent shortfall.

Here are the details of the deal:

Property value: £100,000 each property

Loan amount: £75,000 each property

LTV: 75%

Rate: 7.99% 3 year fixed for individuals

Term: 3 years interest only

Borrower: Personal name

Lender arrangement fee: 3% (£2,240 each)

Mortgage payment: £497 pcm each

Rental income: £500 pcm each

Gross yield: 6% pa

Consultant: Julie Priest, 07734 137877

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