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Remortgage Within Six Months for Complex HMO Buy to Let Case

Remortgage Within Six Months for Complex HMO Buy to Let Case

The Clients: A pair of experienced landlords, with three buy to let properties owned through a limited company, all located in and around London.  

The Property: Situated directly on a busy street, beside an MOT centre and school, Our clients had purchased this five-bedroom HMO for cash at auction just six months ago. Wanting to take advantage of the low rates and maximise borrowing potential, they were looking for a five-year fixed rate.

The Finance: Having bought this property with cash, the directors wanted to remortgage the property to capital raise for future investments.

The Challenge: The initial challenge was around the complex criteria aspects of this case. Firstly, most high-street lenders would not supply finance due to the property being purchased in the last six months. Furthermore, the location raised questions for the future saleability of the property, as the MOT centre and school could be noisy.

Lastly, one of the director’s was proceeding with a solvent liquidation. As they would no longer be a director of the limited company, this raised concerns around affordability for the property and caused some BTL lenders to decline the case.

The Solution: After speaking to a few lenders with criteria that would consider our client, we found one willing to work out a solution with us. We suggested that the outgoing director be removed from the limited company and replaced with the remaining director’s wife in order to work around the affordability issues. Comfortable with this arrangement, all that remained was for the valuer to report back whether the nearby MOT centre and school would cause issues with resale.

The valuer’s comments were favourable and deemed that the nearby commercial properties would not impact resale. Consequently, the lender happily offered the five-year fix our client wanted, meaning he could raise the capital required for another investment purchase. Here are the details:

Property Details

Property value: £525,000

Loan amount: £367,500

LTV: 70%

Rate: 3.54% 5-year fixed

Term: 10 years, interest-only

Mortgage payment:  £1,103 per calendar month

Lender arrangement fee: £6,431

Rental income: £3,250 per calendar month

Application: SPV Limited Company

Consultant: Deepinder Bhangoo, 01932 471 661

NB: ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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Mortgages for Business Ltd is authorised and regulated by the Finance Conduct Authority (No. 313537) to transact regulated mortgages. We are a credit broker, not a lender. We work with the whole of market in sourcing a lender for you; we may receive a commission from the lender, and this amount varies between lenders. The FCA does not regulate some investment mortgage contracts. Mortgages for Business Ltd is a founding member of the National Association of Commercial Finance Brokers, the body that promotes best practice within the commercial finance industry. Telephone calls may be monitored or recorded for training purposes.

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