The client: A full-time landlord approached us looking to raise capital against one of his rental properties. He planned to use the capital raised to expand his property portfolio with his fourth buy to let purchase.
The property: The client was looking to raise capital against an unencumbered five flat multi-unit in Hull - currently let to students.
The finance: In total the client was looking to raise £225,000 against the property valued at £300,000. Looking for a period of stability, the client had requested a five-year fixed rate.
The application process: Due to the complexity of the case we needed to approach a specialist lender. We took the case to Keystone Property Finance for the following reasons:
- No minimum income restriction. The client takes home less than £20k pa. Most lenders impose a minimum restriction of £25k pa.
- Rental income accepted as sole income. The majority of lenders prefer landlords to earn an income in addition to rent.
- SPV limited companies accepted. Keystone offers the same pricing to individuals, SPVs and trading limited companies.
- Students as tenants. Only a third of buy to let lenders offer mortgages to SPVs letting to students.
- Up to 10 separate flats within one multi-unit. Only a handful of lenders offer rates on large multi-units.
Prior to application we sat down with one of the business development managers at Keystone to discuss the case. Happy that the client was a good fit, we submitted the case and received a formal mortgage offer within three weeks.
Here are the details of the deal:
Property value: £300,000
Loan amount: £225,000
Rate: 4.19% 5 Year Fixed
Term: 25 years interest only
RTI: 125% @ 4.19%
Lender arrangement fee: 2% of loan amount (£4,500)
Mortgage payment: £785pcm
Rental income: £3,200pcm
Gross yield: 12.8% pa
Consultant: John Kennon, 01625 416390
6th June 2018