Buy to let mortgage for couple buying flat on 6th floor of mixed-use block
The Client:
A married couple both of whom hold senior positions in the medical industry. They have two children and own two rental properties in Liverpool where they live. They were looking to add to their portfolio which they hold in an SPV Ltd company.
The Property:
A 6th floor flat in a seven-storey, mixed-use block built in 2009. On the ground floor is a furniture shop.
The Finance:
They had a deposit of £56,000 and needed a mortgage at 60% loan to value to make the purchase. We knew immediately that the finance options would be limited because some lenders won’t accept flats in:
• Blocks of more than five storeys
• Blocks with a commercial element
• A mixed-use block where the commercial element is on their exclusion list, i.e. fast food take-aways
The couple requested a five-year fixed rate as they are currently well-priced and it would protect them against future interest rate rises. They also wanted capital and interest repayment terms so that they will own the flat outright when the mortgage ends.
The Application Process: We approached a buy to let lender which we knew would be most likely to accept the scenario. As expected the lender issued an agreement in principle, so we submitted a full mortgage application with supporting documentation on behalf of the couple.
A property valuation was duly instructed and the ensuing report confirmed that the flat and its location fell within the lender’s criteria. We then worked with all parties to ensure the application was processed smoothly and on time. Here are the details of the completed deal.
Property Details
Property value: £140,000
Loan amount: £84,000
LTV: 60%
Rate: 3.29% fixed for 5 years
Rent to Interest calculation: 125% @ 3.29%
Term: 15 years capital & interest repayment
Borrower: SPV Ltd company
Mortgage payment: £592 pcm
Lender arrangement fee: 2% (£1,680) of the loan amount
Rental income: £795 pcm
Gross yield: 7% pa
Consultant: Gavin Elley
26th February 2018
