The Client: An experienced portfolio landlord with five buy to let properties owned both individually and in an SPV limited company. His sole income source was rental income.
The Property: Located in a popular commuter town of South London, the two-bedroom flat provided tenants with easy access to the city centre and some fantastic green spaces.
The Finance: Our client wanted to remortgage the property in order to raise capital for the purchase of another buy to let property. He was looking to secure a competitive five-year fixed rate for the remortgage.
The Challenge: Part of a purpose-built block of flats, we would first need to check that building was compliant with fire and safety regulations standards and not in need of an EWS1.
Furthermore, as a portfolio landlord whose only income came from rent, we’d be restricted in the number of buy to let lenders that would consider our client’s application. This would be further complicated as our client didn’t have an onward purchase already in place but wanted to capital raise to have the funds readily available for when he found a suitable investment.
The Solution: Firstly, we needed to ascertain whether the property would be subject to an EWS1. Fortunately, at only three stories and under 18 metres, it wasn’t which made our search for an appropriate lender a little easier.
As a specialist buy to let broker, we deal with many portfolio landlord clients, and it’s not uncommon for these professional buy to let landlords to capital raise before going property shopping. Our experience in this area of the market gave us a good idea of where to start when researching appropriate buy to let lenders, and the competitive rate our client was after. From our research, we were able to secure a great mortgage product that also came with a free valuation and free legals, which our client was thrilled about. The lender was completely comfortable with the capital raise element despite no onward purchase at the point of completion. Here are the details:
Property value: £225,000
Loan amount: £162,985
Rate: 2.16% five-year fixed
Term: 25 years, interest only
Mortgage payment: £295.16 per calendar month
Lender arrangement fee: £995
Rental income: £950 per calendar month
Gross yield: 5% per annum
10th March 2021