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Remortgage within 6 months of purchase at increased property value

Remortgage within 6 months of purchase at increased property value

We were approached by a client who wanted help to remortgage and raise capital on a recently purchased and refurbished block of flats owned on a single freehold title. The client is a very experienced landlord with more than 20 rental properties mostly located in towns on the South Coast.

His modus operandi is to buy run down blocks of flats, refurbish them then let the units out to students and working professionals. On the advice of his accountant, he mostly operates via an SPV limited company.

The block in question, comprises two 3-bed flats and one 2-bed flat which he had purchased three months before with a buy to let mortgage product that came with no early repayment charges (ERCs). Having fully refurbished and let all three units, the client was looking to refinance onto a buy to let mortgage at the new market value and release funds for further purchases.

Most lenders will not finance properties until they have been owned for a minimum of six months, and many that do will only allow a remortgage at the original purchase price. Added to this, most mainstream buy to let lenders will not touch multi-unit properties owned on a single freehold, or limited company borrowers so this was clearly a case for a specialist lender.

The lender we approached agreed in principle that both the client and the property were a good risk and offered to lend subject to the loan amount being no greater than the original purchase price. 

Property Details

This stipulation was acceptable to the client and the following terms were offered:

Property value, post refurbishment: £700,000

Original purchase price: £500,000

Loan amount: £500,000

LTV: 71%

Rate: 4.19% 5 year fixed

Term: 25 years interest only

RTI: 125% @ 4.19%

Borrower: SPV Limited Company

Lender arrangement fee: 2% (£10,000)

Mortgage payment: £1,780 pcm

Rental income: £3,500 pcm

Gross yield: 6% pa

Consultant: Jeni Browne, 01732 471647


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Mortgages for Business Ltd is authorised and regulated by the Finance Conduct Authority (No. 313537) to transact regulated mortgages. We are a credit broker, not a lender. We work with the whole of market in sourcing a lender for you; we may receive a commission from the lender, and this amount varies between lenders. The FCA does not regulate some investment mortgage contracts. Mortgages for Business Ltd is a founding member of the National Association of Commercial Finance Brokers, the body that promotes best practice within the commercial finance industry. Telephone calls may be monitored or recorded for training purposes.