We were approached by three brothers-in-law who were looking to purchase their first rental property together. All of them have day jobs. Only one of them is a landlord (with a large portfolio of more than 10 properties), although one works in property management.
They were looking to purchase a mid-terrace town house in West London which was being let as a 5-bed HMO. Our initial discussions with the brothers-in law revealed that they considered that a joint mortgage application in their personal names would be the best option for them
Accordingly, an application to an appropriate lender was duly submitted, a valuation was carried out and a short time later an offer was produced, followed by the exchanging of contracts.
With just 28 days to go until completion we received an urgent call from one of the applicants informing us that, after taking further tax advice, they had discovered that buying the property in an SPV limited company would be a more appropriate route. This meant that we had just 27 days to submit a another application and get a new mortgage offer.
Fortunately, for our clients:
- The lender also caters to limited company borrowers offering the same rates as it does to individuals
- We have an extremely close relationship with the lender and were able get them to agree to processing a new application within the short timescale. This was expedited by the use of the same valuation report.
Here are the details of the final terms offered. The deal completed on time.
Property value: £591,000
Loan amount: £358,000
Rate: 3.79% 2 years discounted
Term: 25 years interest only
Lender arrangement fee: 1.5% (£5,280)
Mortgage payment: £1,054 pcm
Rental income: £3,750 pcm
Gross yield: 7.6 % pa
Consultant: Paul Keddy, 01732 471655
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.