Trading Ltd Co raises capital against 1-bed flat to extend short lease
A part-time landlord contacted us looking to refinance one of her rental properties.
As well as managing her small property portfolio, the client is also the sole director of a recruitment company and is in full-time employment as a sales representative within the healthcare industry.
She was looking to raise capital against a one-bed flat held by her trading limited company. The flat is part of a block of four in East London.
The capital raised would be used for two purposes:
- To extend the lease on the current flat
- To use as the deposit on a further investment property
There were a few complications with this deal which meant we would need to approach a specialist lender.
- The flat only has 69 years remaining on the lease – most lenders require leasehold flats to have a minimum of 70 years at the start of the mortgage, some require longer.
- There are fewer lending options available to trading limited companies
- The trading limited company only showed a small profit
We decided to take the case to Keystone Property Finance – an intermediary only lender which takes a manual approach to underwriting. It is also one of the few lenders which offers the same rates to trading limited companies, SPVs and individuals.
Keystone normally requires a leasehold flat to have 50 years remaining at the end of the mortgage, which would only allow the client to take out a 19 year term. Hoping for 25 years, we discussed the case with the underwriter and explained the client would be using some of the funds raised to extend the lease.
Happy with the reasons for capital raising, the landlords experience and background income, the following terms were offered.