A part-time landlord approached us looking to refinance her sole rental property.
In addition to property investment, the client also works as a teaching assistant in a local primary school.
The property in question is a one-bed flat above a shopping centre in Kent, which the client had purchased for cash six months ago after inheriting money from a relative. The client was hoping to refinance it at the full market value and use the capital raised to buy a further property.
There were three challenges with this case, which would restrict the number of finance options available.
1. The client had only been a landlord for six months. Most lenders like landlords to have at least one years’ experience
2. The client earns less than £25k per annum – the minimum set by many lenders
3. The flat is located above a busy shopping centre, which comprises of several retail and food outlets. Lenders are often cautious when lending on flats above commercial premises, especially when food outlets are involved.
We took the case to a specialist lender, which can only be accessed by other intermediaries. This lender doesn’t impose any minimum income or experience requirements and is happy to consider properties on a case by case basis.
Comfortable with the valuation report and the property’s rental income, the following terms were offered.
Property value: £200,000
Loan amount: £150,000
Rate: 3.39% 5 year fixed
Term: 25 years interest only
RTI calculation: 125% @ 3.39%
Mortgage payment: £431 pcm
Lender arrangement fee: £3,000 (2%) added to the loan
Rental income: £850 pcm
Gross yield: 5.1% pa
Consultant: Nick Helm, 01732 471608
3rd October 2017