We were approached by a broker whose client was looking for finance to purchase his second investment property, having bought his first buy to let six months previously. He had had an offer accepted on a 4-bed semi, built in 1990 which was already tenanted on a single AST to a family for £2,500 pcm. The vendor was looking for a quick sale.
The client, who is a home-owner, also runs a furniture business which only generates a small annual profit. His father, who lives in India, had agreed to provide the majority of the deposit for the purchase.
Having taken advice from his accountant, the client had set up a new SPV limited company through which to make the purchase which also meant he would be able to achieve a higher loan amount than borrowing personally.
We took the deal to a lender which we felt had the right criteria and could process the case quickly. We helped the broker collate all the necessary paperwork and the application was duly submitted. For the most part it progressed smoothly. There was a slight delay with the gifted deposit; the transfer of such a large sum necessitated additional anti money-laundering checks. With no other offers on the table, the vendor decided his best option was to accept the delay and the entire deal was completed in 10 weeks from initial enquiry to completion. Here are the details:
Property value: £780,000
Loan amount: £490,100
Rate: 3.79% five year fixed
Term: 20 years, interest only
RTI calculation: 125% at 3.79% (pay rate)
Borrower: SPV Ltd Company
Lender arrangement fee: 2% added to the loan amount (£9,802)
Mortgage payment: £1,547 pcm
Rental income: £2,500 pcm
Gross yield: 3.9% pa
Consultant: Luke Worrell, 01732 471684
1st March 2017