Portfolio landlord purchases 7-bed student HMO in Scotland

Portfolio landlord purchases 7-bed student HMO in Scotland

01.06.18 | Written by: Andy McOwat

The Client: A professional landlord with over ten properties in his portfolio – all held within his personal name.

As well as managing his property portfolio, the client is the sole director of a successful business in the retail sector.

The Property: Located in close proximity to the University of Dundee, the client was looking to purchase seven-bed HMO. He planned to let the property to students.

The Finance: The client was looking to secure a mortgage at 70% loan to value with his deposit coming from a mixture of personal savings and company dividends. To protect himself from any interest rate rise in the near future, he had requested a five year fixed rate.

Whilst this is fairly standard request, the fact that the property is an HMO and situated in Scotland meant that we would have to seek finance from a specialist lender.

The Application Process: Prior to approaching our chosen lender, we worked with the client to complete our buy to let application form and collate supporting documentation.

We took the case to a bank which regularly lends on these complex scenarios, with whom we have a strong relationship with. Deeming the client a good risk, an offer was made. The deal completed six weeks later.

Property value: £182,500

Loan amount: £127,750

LTV: 70%

Rate: 5.68% 2 year fixed

Term: 10 years interest only

RTI: 125% @ 7.68%

Lender arrangement fee: 2% of loan amount (£2,555 added to loan)

Mortgage payment: £605 pcm

Rental income: £1,925 pcm

Gross yield: 12.6% pa

Consultant: Andy McOwat, 01625 416 396

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