A mother and son approached us looking to release equity from one of their buy to let properties – a two-bed flat within an 18-storey block. They planned to use the capital raised to purchase their third buy to let property.
The mother and son’s properties are held within an SPV Ltd Co. The son is the sole director and 80% shareholder, the mother owns the remaining 20% shareholding.
As the mother is elderly with no income, we needed to source finance from a lender which would underwrite the case based solely on the director’s income. (Some lenders will ask to look at the income of all shareholders).
We took the case to an intermediary only lender which will underwrite on this basis and, happy with the son’s income and experience, the following terms were offered:
Property value: £210,000
Loan amount: £145,000
Rate: 3.54% 2 year discounted
Term: 22 years interest only
Borrower: SPV Ltd Co
Lender arrangement fee: £2,175
Mortgage payment: £430 pcm
Rental income: £875 pcm
Gross yield: 5% pa
Consultant: Gavin Richardson, 01732 471613
4th July 2017