Multi-Unit Purchase for First Time Landlord Using Gifted Equity

The Client: A first-time landlord looking to begin their buy to let investment journey by purchasing a multi-unit property into her newly formed SPV limited company.

The Property: A residential house which had been converted into a multi-unit property containing two separate flats. Situated in London, the existing buy to let property benefitted from having tenants already in situ.

The Finance: Our client required a 75% LTV limited company buy to let mortgage so that they could complete the purchase of the multi-unit property.

The Challenge: The first challenge was finding a lender that would accept a first-time landlord, let alone a first-time landlord purchase of a multi-unit property. Typically a specialist buy to let investment, the majority of lenders require previous landlord experience for borrowers looking to invest in multi-unit properties.

The second challenge was that our client was purchasing the property from her father. Many lenders won’t consider family sales, as there’s a risk that the property may be being sold below the true market value. This was further complicated because our client’s father was gifting 25% of the equity in the property as a deposit for his daughter to complete the purchase.

Sourcing a lender that would accept all three of these conditions on a multi-unit property purchase was undoubtedly going to be a challenge of our mortgage broker skills!

The Solution: Due to the complex nature of the purchase, we needed to use our connections with some of the more specialist buy to let lenders in the market, many of which borrowers cannot access without a broker.

After approaching a couple of lenders with the case, it became apparent that only one on the market would accommodate all our requirements and offer a competitive buy to let mortgage interest rate. Having collated all the necessary documents from our client, we were able to submit the application to the lender, and our client successfully started her buy to let investment journey!

Property Details

Property value: £465,000

Loan amount: £348,750

LTV: 75%

Rate: 3.85% two-year fixed

Term: 25 years, interest-only

Mortgage payment: £1,141 per calendar month

Lender arrangement fee: 2% (£6,975)

Rental income: £2,500 per calendar month

Gross yield: 6.45% per annum

Application: SPV Limited Company

Consultant: Deepinder Bhangoo, 01732 471 661

3rd March 2021