We were approached by a married couple, experienced landlords with a portfolio of four properties held in an SPV limited company. The clients' portfolio was thus far unencumbered, but they had decided to leverage their properties to raise capital for further investment.
The portfolio consists of four 2-bed flats, each located in different parts of South-East London, with values ranging from £225,000 to £582,500. Rather than mortgage each property individually, the clients requested a single facility using all four properties as security.
Most lenders prefer to deal with each property individually, rather than offer a buy to let mortgage against an entire portfolio, but we took the case to a challenger bank which we know offers this kind of loan at competitive rates. As with all buy to let lending to limited companies, the bank required personal guarantees from each director which were duly given. As the rental income could support the loan and the directors had strong credit profiles, the bank offered the following terms:
Value of all 4 properties: £1,502,500
Loan amount: £950,000
Rate: 3.69% 5 year fixed
Term: 20 years interest only
RTI calculation: 125% @ 5.69%
Borrower: SPV Ltd Company
Mortgage payment: £2,977 pcm
Lender arrangement fee: 1.5% (£14,250)
Total rental income: £6,500 pcm
Gross yield: 5.2% pa
11th September 2017