SPV directors raise £55k refinancing HMO and save £206 pcm

We were approached by the directors of an SPV limited company who had seen our free property portfolio review service advertised in our weekly Investor Update. The four directors own 12 mortgaged buy to let properties – the majority of which are HMOs.

Interested to see if we could help them release capital as a matter of urgency and reduce their monthly outgoings without being tied into lengthy Early Repayment Charges, one of the directors sent us over a spreadsheet of their properties and borrowing.

The first property on the spreadsheet was a fully let, six-bed HMO with an outstanding mortgage balance of just below £200k. The initial rate had expired and they were paying the lender’s Standard Variable Rate of 4.99%.

We sourced a buy to let mortgage that would allow the directors to:

• Raise £55k for further property investment
• Keep borrowing to a max of 75% LTV
• Reduce the mortgage payments by £206 pcm
• Restrict ERCs to the first 12 months

The directors liked the product and were keen to get an application submitted before the new rules for lending to portfolio landlords are introduced because they had identified property they wished to purchase. We worked together to compile the necessary paperwork and just nine working days later the lender produced a remortgage formal offer.
We continue to work through the spreadsheet to help ensure that the directors have the best possible finance in place on the remaining 11 properties.

We are also helping them to choose a suitable mortgage for their new purchase.
Here are the details of the refinance deal:

Property Details

Property Value: £338,000

Loan amount: £253,500

LTV: 75%

Rate: 3.74% 1 year fixed

Term: 25 years interest only

RTI calculation: 125% at 5.50%

Borrower: SPV Limited Company

Mortgage payment: £790 per month

Existing mortgage payment: £996 per month (saving £206 per month)

Lender arrangement fee: 2% of loan amount (£5,070)

Rental income: £2,800 per month

Gross yield: 9.9% pa

Consultant: Nick Helm, 01732 471 608

14th August 2017