The client is a 75 year old landlord with an annual income of circa £10,000 derived solely from rent. She does not own her own home (her husband owns it) but she does own a 7-bed HMO in Nottinghamshire that she lets to students. The mortgage on the HMO was reaching the end of its term and the client was keen to refinance onto a better rate.
There were numerous factors that meant finding a suitable lender for this case would not be easy.
- HMOs are not accepted by all buy to let lenders
- Many buy to let mortgage lenders will not accept students as tenants
- Most buy to let mortgage lenders impose a maximum age of 75 on maturity of the loan
- Most buy to let mortgage lenders require the applicant to have a minimum income of £25k per annum
Fortunately I was able to find a specialist lender who would accept the applicant and the property type.
Here are the details of the deal:
Property value: £200,000
Loan amount: £75,000
Loan to value: 38%
Rate: 5.40% LIBOR tracker for loan term
Term: 5 years interest only
Monthly mortgage payment: £338
Monthly rental income: £1,583
Annual gross yield: 9.5%
Lender arrangement fee: 1.7%
Consultant: Paul Martins