The client: An experienced buy to let landlord with significant property refurbishment experience.
The property: Originally a freehold house, the property had been converted and used as a commercial office space for a number of years. Our client had purchased the office and converted it into two separate flats under one title.
The finance: Having completed the change of use refurbishment, our client was looking to refinance the multi-unit property onto a buy to let mortgage, which would be cheaper than his existing commercial mortgage and allow him to let out the new flats.
The challenge: Three main challenges made it difficult to place this case with a lender. Firstly, the property consisted of two flats under one title, making it a multi-unit property. This would restrict the number of lenders available to us, especially as the two flats would need to be sold together in the event of repossession (as they were on one title rather than two separate ones).
Secondly, the property was next to a Chinese takeaway, which could deter potential buyers and tenants. This could potentially cause issues with the property valuation during the mortgage process and may put some lenders off.
Thirdly, the property had a commercial loan from a high street bank attached to it. Some lenders may be hesitant to offer on the property until they are comfortable that the correct change of use planning process had taken place before the refurbishment.
The solution: With extensive experience working with complex buy to let cases, we started by shortlisting specialist lenders that accepted multi-unit properties. Having assessed the case carefully, we approached a possible lender to complete pre-valuation checks to ensure the nearby takeaway and change of use refurbishment would not negatively impact our client's chances of a buy to let mortgage. We made a strong case for our client by having these conversations up front, and following valuation inspection, the lender was happy to offer the finance. By doing this, we were able to save our client a significant amount of money by sourcing them a less expensive buy to let interest rate than their existing commercial loan.
If you have a complex property that you are looking to finance and would like professional help, we have lots of experience working on these not-so-simple cases. Our brokers are on hand to source a mortgage solution tailored to your needs. Get in touch by submitting an enquiry to find out how we could help you.
Property value: £400,000
Loan amount: £260,000
Rate: 3.73% fixed for 5 years
Term: 5 years fixed, interest only
Mortgage payment: £808 per calendar month
Lender arrangement fee: Nil
Rental income: £2,400 per calendar month
Gross yield: 7.2% pa
Consultant: Deepinder Bhangoo, 01732 471661
26th January 2022