SPV Ltd Co purchases first HMO at 80% LTV using inter-company loan

A married couple - the owners of an independent pharmacy, contacted us for help in finding finance to purchase their second rental property.

The couple were looking to make the purchase via their SPV limited company, with the deposit coming from their pharmacy business.

The property in question is a six-bed HMO just outside Maidstone.

Several factors meant this case would need to be placed with a specialist lender.

1)      The deposit would be classed as an inter-company loan, something that not all lenders are happy to accept.

2)      Many lenders require experience in renting out HMO property – the couple did not have any

3)      The couple wanted to borrow at 80% LTV, there are only a handful of lenders which will allow this

4)      Although the couple have a successful business, their actual take home income is below £25k per annum

We approached one of the specialist lenders, which we knew would consider the case. Happy that the couple and the property were a good fit with their lending criteria, the following terms were offered:

Property Details

Property value: £351,000

Loan amount: £280,000

LTV: 80%

Rate: 4.04% 2 year tracker

Term: 20 years interest only

Lender arrangement fee: 1.5% (£4,212)

Borrower: SPV Ltd Co

RTI: 140% @ 5%

Mortgage payment: £922 pcm

Rental income: £2,400 pcm

Gross yield: 8.2% pa

Consultant: Chris Longhurst, 01732 471607

28th March 2017