Complex Portfolio Purchase from Personal to Ltd Company
The Clients: the two principal applicants, a married couple, were experienced, professional landlords in their late 70s and 80s. The clients were directors of a limited company, and between them, they held 100% of the company shares. The limited company also had three other non-shareholding directors.
The Properties: the couple held five buy to let properties in their personal names. These were a mixture of standard houses, an HMO, a Multi-Unit Freehold Block (MUFB) and a leasehold flat, which together provided a large amount of rental income.
The Finance: the clients wanted to purchase their personally owned properties into their limited company. They wanted to put all their properties on one interest-only mortgage, so there would only be one monthly mortgage payment to cover all five properties. It was also important to them that the mortgage allowed for overpayments.
The Challenge: this case included multiple complicated aspects. The first hurdle we encountered was the complex limited company structure as most lenders restrict the number of company directors to four; however, this SPV had five. We would also have to find a lender who would be comfortable with three of the directors not being shareholders.
The second-largest complication we had to navigate was the age of the clients; the majority of lenders have an age limit for borrowers of 75 years and both our principal applicants exceeded this. These two aspects combined severely reduced our choice of lenders before we even started looking at specific products.
The clients were very clear that they wanted a single, interest-only mortgage for all the properties, ideally for a 20-year term. Had all the properties been the same type, e.g. HMOs, this wouldn’t have provided such an issue; however, as they were all different, it was going to be challenging to find a lender willing to finance them under one facility. Furthermore, most lenders cap interest-only mortgage terms to 10 years, leaving us with very few lender options at all.
The Solution: after speaking to clients, we put together a paper highlighting their extensive landlord experience, strong income and excellent credit history. Due to all the complex aspects of the case, there was only one lender we thought would be able to meet the needs of our clients. Fortunately, this particular lender doesn’t have an age limit for borrowing, and over the years, we have built a good working relationship with their underwriters. Our relationship with the lender enabled us to discuss the client’s unique details with them, putting forward a strong case. Based on the strengths highlighted in our paper, the lender was happy to offer a single, interest-only mortgage for all five properties, with the option of overpayments to a term of 20 years - exactly what the clients had requested. Here are the details: