We were approached by a part-time landlord who, on the advice of his accountant, was looking to sell one of his personally owned rental properties to his newly established Special Purpose Vehicle limited company.
The property is a three-bed semi-detached house located in a Hampshire seaside town. Although it was in a decent enough condition for renting, it was looking a bit tired and old-fashioned internally, so the landlord planned a light refurbishment throughout with some of the finance raised.
Three main issues collectively meant that we would need to source a specialist rather than mainstream buy to let lender for finance:
- The vendor or purchaser are related. Many lenders steer clear of these transactions.
- In its non-refurbished condition, the property would rent for less which would reduce the amount the client could borrow, despite the fact that the landlord planned to redecorate as soon as the funds were available.
- The client’s credit profile showed some adverse reports from five years before, although they had all been rectified.
The client had requested a competitive five year fixed rate – no pressure then! – so we approached a lender that deals in more complex borrowing requirements and has recently launched some very appealing five year products. After a bit of negotiation with the underwriting team, we were able to secure the following rate which was accepted by the client:
Property value: £250,000
Loan amount: £187,500
Rate: 4.09% 5 year fixed
Term: 25 years interest only
Borrower: SPV Ltd Co
Lender arrangement fee: £2,499
Mortgage payment: £645 pcm
Rental income: £925 pcm
Gross yield: 4.4% pa
Consultant: Nick Helm, 01732 471608
14th September 2016