The Client: A first-time landlord, our client had inherited the property from a family member. He didn’t own any other property and lived with family elsewhere.
The Property: Situated in a desirable area of London, our client’s luxury two-bedroom flat was unencumbered and valued at £2.8 million.
The Finance: After much consideration, our client wanted to remortgage the unencumbered property and raise capital for further buy to let purchases.
The Challenge: The first challenge was to find a buy to let lender that would accept an applicant who didn’t own their own home, as many lenders require this in their criteria.
Secondly, our client’s only form of income was from the rent that the property generated, which, while substantial, rendered him high risk should the property ever be vacant.
Lastly, as most buy to let lenders require proof of an onward purchase before releasing the funds, we would have to keep this in mind when completing our research for this client, as he had not yet chosen his next buy to let property.
The Solution: With independent access to the whole of the buy to let mortgage market, we used our knowledge of lender criteria to source a suitable solution for our client. Approaching a lender accustomed to dealing with more complex deals, we explained the details of the case. The lender was comfortable with all the possible challenges posed and was even happy to release the funds without proof of an onward purchase! Here are the details:
Property value: £2.8 million
Loan amount: £1 million
Rate: 1.95% five-year fixed
Term: 20 years, interest-only
Mortgage payment: £1,623 per calendar month
Lender arrangement fee: £1,999
Rental income: £6,067 per calendar month
Gross yield: 2.6% per annum
Consultant: Deepinder Bhangoo, 01732 471 661
27th January 2021