The Clients: Experienced landlords, our clients owned a property portfolio of more than ten properties, the majority of which are in their personal names.
The Property: A four-bedroom flat above an off-licence in London. Our clients had a good relationship with the freeholder, who had just extended the lease on the property.
The Finance: Having owned the property for some time, our clients were looking to release equity by refinancing to a 75% LTV mortgage. This would allow our clients to expand their portfolio further.
The Challenge: The size of our client’s portfolio meant their overall borrowing was already substantial, and as such, the number of lenders we had access to was limited, and would probably be in the specialist end of the market. However, our clients were looking to secure a particularly competitive rate and pay no more than 3%.
Alongside our client’s profile, the property itself also raised some challenges. Located on a busy high street in London, lenders were apprehensive that the property would be in demand. This was only escalated by its positioning above an off-licence, with flats above commercial units typically harder to let out and sell.
The Solution: Our time in the market has meant that we have developed close relationships with some of the key lenders. As such, we were able to set aside time to speak face to face with one of the Business Development Managers, and discuss our clients’ needs and their experience in detail. The lender we spoke to was happy to deal with portfolio landlords, and our clients’ experience demonstrated their successful property investment business, making them reliable applicants. Our clients were also able to provide evidence of tenant demand and rental profit from the property, thus reassuring the lender on all accounts. As such, the lender was happy to provide a quote within the clients’ budget. Here are the details:
Property value: £320,000
Loan amount: £240,000
Rate: 2.99% fixed for 5 years
Term: 10 years, interest-only
Mortgage payment: £607.06 per calendar month
Lender arrangement fee: 1.5% added to the loan (£3,600)
Rental income: £1,750 per calendar month
Gross yield: 6.56% per annum
18th May 2022