Two brothers contacted us for help in finding finance to purchase their first rental property – a six bed HMO in Swansea.
The brothers were hoping for this property to be their first of many, so had set up an SPV limited company through which they would make this and all subsequent purchases.
There were two main challenges with this case that would limit the number of finance options available.
- Both brothers are first-time landlords. Most lenders like to see experience, especially when it comes to renting out HMO property
- The brothers were planning to rent the property to students
We approached one of the specialist lenders which we knew would consider the case. Happy that the brothers were a good risk, the following terms were offered.
Property value: £225,000
Loan amount: £168,750
Rate: 3.49% 2 year discounted
Term: 20 years interest only
RTI: 125% @ 5.25%
Borrower: SPV Ltd Company
Lender arrangement fee: 1.5% (£2,531)
Mortgage payment: £498 pcm
Rental income: £1,500 pcm
Gross yield: 8% pa
Consultant: Charlie London, 01732 471604
31st May 2017