We were approached by a married couple from Bristol looking to purchase a buy to let property in the Midlands.
The husband has managed a small property portfolio in the past, but has since sold his rental properties to focus on his day job.
Wanting to re-enter the buy to let market the husband had set up an Special Purpose Vehicle limited company with his wife in order to start purchasing rental property again.
After researching potential areas, the couple had set their sights on a four-bed HMO in the student town of Stoke-on-Trent.
There were two main challenges with this case:
- Although the husband has previous experience, they currently own no rental properties, classing them as first-time landlords with some lenders
- Many lenders require experience in renting out HMO property – the couple did not have any
We took the case to intermediary only lender Keystone Property Finance which took the view that, as the property did not require an HMO licence, providing that the rental income on a family letting basis was sufficient, it would lend to the SPV on the following standard terms.
Property value: £105,000
Loan amount: £78,750
Rate: 3.99% 5 year fixed
Term: 25 years interest only
RTI: 125% @ 3.99%
Borrower: SPV Ltd Co
Lender arrangement fee: 2.5% (£1,969)
Mortgage payment: £270 pcm
Rental income: £600 pcm
Gross yield: 6.9% pa
Consultant: Gavin Elley, 01625 416398
This is just one example of how we have helped secure finance for a client, if you have a similar scenario or something you'd like us to look at please get in contact with us on 0345 345 6788 or contact me directly at firstname.lastname@example.org.
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
First-time landlords purchase student HMO via newly established SPV Ltd Co
7th February 2017