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Landlord with low income raises capital to purchase new buy to let

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 Details

Property value: £300,000

Loan amount: £225,000

LTV: 75%

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

NB: ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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Mortgages for Business Ltd is authorised and regulated by the Finance Conduct Authority (No. 313537) to transact regulated mortgages. We are a credit broker, not a lender. We work with the whole of market in sourcing a lender for you; we may receive a commission from the lender, and this amount varies between lenders. The FCA does not regulate some investment mortgage contracts. Mortgages for Business Ltd is a founding member of the National Association of Commercial Finance Brokers, the body that promotes best practice within the commercial finance industry. Telephone calls may be monitored or recorded for training purposes.

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