The Client: A self-employed business owner with three buy to let properties looking to purchase his fourth.
The Property: A three-bedroom semi-detached residential house located in the North West. The property has excellent access to local amenities and fast transport links to surrounding cities.
The Finance: Using a 25% deposit from funds saved in his Trading Limited Company, our client required a 75% LTV mortgage to complete the purchase.
The Challenge: The initial challenges for this case were criteria based. Firstly, the fact this purchase would qualify our client as a portfolio landlord restricted our choice of buy to let lenders from the start. Secondly, although a completely legitimate deposit source, some lenders are uncomfortable underwriting intercompany loans as it is a more complex structure than the usual director’s loan. Despite these complexities, we knew several specialist buy to let lenders would accept the case and collected all the financial documentation we’d need to prove the intercompany loan’s legitimacy, which would help speed up the process.
The Solution: Having identified a competitive mortgage rate with a reliable specialist buy to let lender, we were keen to proceed so our client to secure the purchase. Unfortunately, due to COVID, our client’s Trading Limited Company had diminished income, which didn’t quite meet our desired lender’s minimum income requirement. To overcome this, we were able to put a case together that combined income received from our client’s Trading Limited Company and the rental income from his other buy to let properties to meet the lender’s minimum requirement. Once we’d submitted all the documentation, the lender was happy to proceed with the application, and our client’s purchase was fully secured. Here are the details:
Property value: £163,000
Loan amount: £122,250
Rate: 3.50% five-year fixed
Term: 25 years, interest-only
Mortgage payment: £375 per calendar month
Lender arrangement fee: £299
Rental income: £800 per calendar month
Application: SPV Limited Company
Consultant: Rob Gurr, 01732 471673
17th March 2021