HMO remortgage for professional landlord with complex property company structure
The client: A highly experienced family of property investors with a large North London portfolio. Most of the portfolio is held in a limited company capacity.
There is a historic trust deed in the background giving beneficial ownership to the family’s property company for those properties held in their personal name.
As the beneficial owner is deemed to be the company, the income and expenses relating to the property are declared on the company’s tax return and not the landlord’s personal tax return.
The property: Owned in their personal name, a 5-storey, 6-bed terraced HMO in North London let to professionals. The property is in a popular residential area just a short walk away from the local high street and tube stop.
The finance: The clients approached us before their existing loan of £900,000 had come to the end of its original fixed rate deal. The clients wanted to raise capital from the property and find a competitive 5-year fixed rate on interest only terms. Their current lender did not allow further advances or second charges.
After thorough research and calculation, we worked out that the clients would benefit by waiting for their current mortgage term to end to avoid paying their early repayment charges.
The application process: We searched the whole of market to find a suitable deal for the clients, and having worked with them many times before, we understood what products work well for the clients and their complicated business structure.
As the clients are portfolio landlords and as the property is registered at Land Registry in personal names, we needed a lender who would understand the complexities of the trust deed in the background and take a sensible approach to the rent cover requirements.
The property is declared on the family’s company tax returns and therefore not included in the clients’ personal tax returns; because of this, the application fell outside of a number of BTL lenders’ criteria.
We liaised with lenders and acted as the main point of contact for the clients. As the arrangement was historic and not put in place as a reaction to recent tax changes we were able to find a lender who was happy to look at the case.
A mortgage offer was made by the lender within two weeks of submitting the application. We then kept in contact with the clients over the following two months and completed the case when the existing penalties came to an end.
Here are the details: