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Landlord receives generous RTI on high-value, low-yielding property

We were approached by a part-time landlord looking to raise finance to expand his buy to let property portfolio.

The client, also a self-employed accountant was hoping to refinance a five-bed detached house in Cheshire.

He had been letting the property to the same family for numerous years and did not want to increase their rental payments, even as the value of the property increased. Because of this, the property was producing a low yield.

Wanting to borrow the maximum possible against the property, we needed to find a lender with a generous rent to interest (RTI) calculation for individual applicants. In January 2017, the PRA tightened affordability calculations for landlords borrowing in their personal name.

We approached a semi-exclusive lender, which can only be accessed via a select panel of mortgage brokers, including Mortgages for Business.

Selecting a five year fixed rate, we were able to secure an RTI calculation of 140% @ 4%, more generous than the standard calculation for individuals at 145% @ 5.5%. 

Here are the details of the deal:

Property Details

Property value: £650,000

Loan amount: £487,500

LTV: 75%

Rate: 3.75% 5 year fixed

Term: 25 years interest only

RTI calculation: 140% @ 4%

Mortgage payment: £1523 pcm

Original monthly payment: £923  pcm

Lender arrangement fee: 0.5% £2438

Rental income: £2800 pcm

Gross yield: 6.8 % pa

Previous monthly payment: £923

Consultant: Andy McOwat, 01732 471607

 

NB: ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Mortgages for Business Ltd is registered
in England and Wales No. 2502713.

Registered office:
17 Kings Hill Avenue,
Kings Hill, West Malling,
ME19 4UA.

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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.

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