The Clients: A self-employed, experienced landlord duo with multiple properties in and around England and Wales. The business partners owned the portfolio under a Limited Liability Partnership (LLP).
The Property: Located in the southern, rural region of Wales, the property was a converted church with six renovated one and two-bedroom high-end flats. All six flats were mortgaged under one title. Due to their location, these flats are a perfect option for those commuting to the centre of the nearby cities.
The Finance: Our clients were coming towards the end of their existing fixed-term buy to let mortgage and wanted to minimise mortgage payments in order to maximise cash flow and yield for the property. Keen to take advantage of the competitive buy to let mortgage interest rates, the duo wanted to remortgage the converted church onto a new interest-only, five-year fixed rate.
The Challenge: The main challenges we encountered were to do with lender criteria. Due to the property being a converted church, refurbished into six individual flats, we’d need to find a lender that would accept Multi-Unit Freehold Blocks (MUFB) up to six units. Typically considered a specialist buy to let property type, not all lenders include them on criteria.
Furthermore, while SPV limited companies are now widely accepted by buy to let mortgage lenders, not all are comfortable with LLPs as underwriting the income is more complicated. Therefore, we required a lender that accepts LLPs. We knew that rates for LLPs and MUFBs would be higher than vanilla buy to let rates, so we’d have to thoroughly research the market to secure the most financially suitable product for our clients.
The Solution: As a specialist buy to let mortgage broker, we have extensive experience sourcing finance for landlords purchasing and remortgaging specialist properties. With full market access, we quickly identified the buy to let mortgage lenders with criteria that covered our client’s property and investment structure. After comparing the mortgage interest rates and products on offer, we secured the most reasonable rate, which would increase our clients' cash flow and yield as requested. Here are the details:
Property value: £450,000
Loan amount: £305,000
Rate: 3.69%, five-year fixed
Term: 25 years, interest-only
Mortgage payment: £956 per calendar month
Lender arrangement fee: 2% (£6,100)
Rental income: £2,290 per calendar month
Gross yield: 6.1% pa
29th September 2021