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21-year-old landlord remortgages rental flat to raise capital

21-year-old landlord remortgages rental flat to raise capital

12.03.18 | Written by: Nick Helm

The client: 21-year-old landlord approached us looking to remortgage her buy to let property which had originally been given to her as a gift by her mother as part of an inheritance and tax planning strategy. The client works full-time for a high-street bank and is a basic rate tax-payer.

The property: A three-bed flat within a terraced house. Previously the flat had just two bedrooms but the client had recently created a third by dividing the largest bedroom.

The finance: The client wanted to buy another rental property, by raising capital for a deposit against the flat, which she owned outright.

The application process: We knew that, due to the client’s relatively young age and lack of buy to let experience, we would have to approach a specialist buy to let lender which can only be accessed via intermediaries. The lender we had in mind, requires borrowers to be at least 21 rather than 25 which is the minimum age requirement from many other buy to let providers.

Even though this lender has a manual underwriting process, we were able to get the client a formal mortgage offer within two weeks of submitting the application.

The valuation report confirmed that the conversion to three bedrooms met all planning and buildings regulations, and the entire deal completed within six weeks from start to finish.

Here are the details:

 

Property value: £320,000

Loan amount: £240,000

LTV: 75%

Rate: 3.99% 5 Year Fixed

Term: 25 years interest only

Lender arrangement fee: 2% (4,800)

RTI: 145% @ 3.99%

Mortgage payment: £798 pcm

Rental income: £1,300 pcm

Gross yield: 4.88% pa

Consultant: Nick Helm, 01732 471608

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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