Two HMO and Multi-Unit Properties Purchased Under One Buy to Let Mortgage
The Clients: A husband and wife, who already owned 2 vanilla buy to lets, were looking to expand their portfolio with their first multi-unit purchase.
The Properties: The couple were looking to purchase 2 properties in a large university city, which were situated next door to each other, but that were on 2 separate titles.
- Property One was a 4-bedroomed student house, let on short ASTS
- Property Two was a 4-bedroom HMO (House of Multiple Occupancy), with a further single self-contained flat within the property that fell below 30 square meters
This equated to 9 units, let to a mixture of professionals, students and tenants on benefits.
The Finance: The seller of the properties wanted to sell them together at one agreed purchase price, with a completion before Christmas. The couple had a 25% deposit and needed a mortgage to complete the purchase.
The Challenge: This case provided a number of challenges, including finding a lender which would:
- Complete both the HMO and Multi-Unit properties under one loan
- Value the properties at the true investment value, rather than simply the bricks and mortar value
- Lend on a property containing a flat which is under the usual requirement of 30 square meters
- Lend on the properties despite a right of way between the two houses which would remain under the ownership of the seller
- Lend to applicants with less than £25,000 of income, made up of rental earnings and a small business
- Accept the properties with existing planning permission for their empty cellars and a 12-year-old planning permission issue on one of the properties
- Offer overpayments on the mortgage without incurring ERCs
- Be able to complete before Christmas
The Solution: Having been let down by their previous broker, the clients approached Mortgages for Business for help. With our knowledge of the specialist lenders who would consider such an investment, we were able to approach a few with the case we put together with the clients. Due to the strong rental income of the two properties, and the couple’s existing landlord experience, we were able to secure a lender which would meet all of the requirements and was confident they could complete before the deadline of Christmas. Here are the details: