Lender retains £10k on buy to let mortgage for multi-unit

The clients: A married couple with three children and a portfolio of five buy to let properties which they own within an SPV limited company. The wife manages the properties and the husband is self-employed as a dentist.

We were delighted to be working with the couple again, this time to help them finance their third buy to let property.

The property: A multi-unit containing two two-bed flats both let to families on standard ASTs. The flats are in central Peterborough close to local amenities including schools, a shopping centre and the train station.

The finance: Using personal savings, the couple had a deposit of £47,000 for the purchase and needed to borrow 75% LTV to meet the agreed sale price. Keen to take advantage of current competitive pricing, the couple wanted to lock into a five year fixed rate.

Weighing up their circumstances, we knew that one of the leading buy to let providers would be a good fit for their requirements because they accept SPVs, portfolio landlords, the self-employed and multi-units.

The application process: Having worked with the couple previously, we already had much of the information required to submit the application. We just needed the couple to update their spreadsheet of properties and send us their latest three bank statements.

A valuation of the property was duly undertaken. Unfortunately, the subsequent report identified a structural issue in the loft and possible damp which lead the surveyor to value the property at £10,000 short of the purchase price.

Despite these issues, the couple were keen to proceed with the purchase believing the loft and the damp could be easily fixed. The lender agreed with this assessment and made a formal offer for the full, requested loan amount subject to a retention of £10,000 which would be released once the remedial works had been completed to an agreed standard.

The couple were happy to accept this condition and proceeded with the application which completed without further problem.

Property Details

Property value: £188,000

Loan amount: £141,000

LTV: 75%

Rate: 3.75% 5 year fixed

Term: 25 years interest only

RTI: 130% @ 4%

Borrowing vehicle: SPV limited company

Lender arrangement fee: £705 (0.5% added to the loan amount)

Mortgage payment: £444 pcm

Rental income: £1,050 pcm

Gross yield: 8% pa

Consultant: Erin Gallacher, 01625 416392


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6th February 2019