We were approached by the director of an engineering company looking to purchase his second rental property – a six bed HMO in East Anglia.
The client was planning to purchase the HMO via his trading limited company and let it to students. He had decided to borrow via his trading limited company as he had built up enough funds within it for a deposit. If the client was to set up an SPV he would need to transfer the deposit via an intercompany loan.
To protect against future rate hikes, the client had specifically requested a five year fixed rate.
We took the case to an intermediary only lender, which offers the same pricing for both individual applicants and those applying via a limited company.
The following terms were offered:
Property value: £230,000
Loan amount: £172,500
Rate: 3.99% 5 year fixed
Term: 25 years interest only
Lender arrangement fee: 1.75% (£2,966)
RTI: 140% @ 5.5%
Borrower: Trading Ltd Co
Mortgage payment: £573 pcm
Rental income: £1,800 pcm
Gross yield: 9.4% pa
Consultant: Chris Longhurst, 01732 471607
1st August 2017