Our client is an experienced developer-cum-landlord with a portfolio of 10+ rental properties. He also works full-time as a chartered surveyor.
In 2013 he teamed up with two other developers to build nine town houses in West London. For the project, they each established a Special Purpose Vehicle limited company in which to hold three houses each. They then took out £5.8m of development finance between them to get the houses built. On completion of the project, our client approached us for help in raising £1.8m to repay his share of the development loan. On top of this he wanted to raise a further £1.94m to fund other projects in his pipeline.
There were numerous challenges with this deal which meant we would need to approach a specialist lender for finance.
- Adjoining properties are often deemed high risk because lenders are exposed in one small area.
- There were no tenancy agreements in place at the time of the application.
- The client has a complex income structure.
- We needed to keep in sync with the other directors so that the development loan could be repaid by all three developers on the draw down date.
- The client was looking for a loan in excess of £1m for each property.
We approached an intermediary only lender which we know considers larger loan amounts on a case by case basis, although as a standard rule it does not go above £1m. Happy with the applicant's experience and the valuation report, the lender agreed to the following terms:
|
Property 1 |
Property 2 |
Property 3 |
Property value |
£2,300,000 |
£2,250,000 |
£2,250,000 |
Loan amount |
£1,332,500 |
£1,170,000 |
£1,237,500 |
LTV |
58% |
52% |
55% |
Rate |
3.99% 5 year fixed |
3.99% 5 year fixed |
3.10% 2 year tracker |
Term |
25 years’ interest only |
25 years’ interest only |
25 years’ interest only |
Lender arrangement fee |
2% (£26,650) |
2% (£23,400) |
1.5% (£18,562) |
Mortgage payment |
£4,430 pcm |
£3,890 pcm |
£3,197 pcm |
Rental income |
£7,000 pcm |
£6,100 pcm |
£6,000 pcm |
Gross yield |
3.7% pa |
3.33% pa |
3.2% pa |
Consultant |
Gareth Richards, 01732 471627 |
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.