The client – a city professional and part-time landlord, approached us looking to refinance one of his rental properties – a 2-bed flat in South East London.
There were two reasons that the client was looking to refinance the property.
- He wished to raise capital to fund the deposit of a further rental property.
- He wanted to transfer the ownership of his property from personal to limited company.
The client had requested a five year fixed rate at 80% loan to value. This would protect him from potential rate rises in the near future and raise enough capital for the deposit he needed.
Although most lenders now accept SPVs, it is still a challenge to find a lender who will accept SPVs, related transactions and go to 80% loan to value. For this reason we approached a specialist lender.
The chosen lender was able to offer a five year fixed rate at a generous stress test calculation of 125% at 5.55%, thus allowing the client to achieve the maximum loan amount.
The following terms were offered:
Property value: £230,000
Loan amount: £184,000
Rate: 3.99% 5 year fixed
Term: 5 years interest only
Lender arrangement fee: 2.5% (£4,600)
Borrower: SPV Limited Company
Mortgage payment: £612 pcm
Rental income: £1,150 pcm
Gross yield: 6% pa
Consultant: Nick Helm, 01732 471608