First-time landlord purchases HMO at 80% LTV
The client: An IT contractor approached us looking to purchase her first investment property. She has been a resident of the UK for over 10 years, having moved from Uganda in 2007.
The property: A run-down, three-bed HMO in Essex. Although the property was deemed lettable, the client wanted to carry out some light refurbishment works to improve the yield and the overall look and feel, before putting it on the rental market.
The property is in close proximity to the local amenities and has excellent commuter links.
The finance: The soon-to-be landlord was hoping for a loan of £168,000 (80% LTV). She had managed to raise a 20% deposit by refinancing her own home.
She had originally tried sourcing finance without the help of a broker, but was unable to find a lender which would accept the following combination of criteria:
- First-time landlords
- Investors with no HMO experience
- A deposit of less than 25%
The application process: We approached an intermediary only lender which we knew included all of these factors within its lending policy, although we discussed the case with the lender’s business development manager before submitting the application to ensure that our client stood the best chance of receiving an offer. The BDM confirmed suitability and so we submitted the application. To our client’s delight a decision in principle was issued 24 hours later.
The subsequent valuation report confirmed the property would make a suitable HMO. Supporting documents included three month’s payslips as well as proof of ID, residency and address. The formal mortgage offer was issued a few weeks later.
Here are the details of the deal: