75 year old landlord refinances 7-bed HMO

1st April 2015 Buy to let Mortgages Case Study

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: Jeni Browne, 01732 471647