First-time landlord gets buy to let mortgage to purchase house at auction

The client is a young professional, who owns her own home but has no experience as a landlord. Just before Christmas 2014, she contacted me for helping in purchasing her first investment property.

At an upcoming auction she had found a 3-bed terraced house in Wiltshire and she was hoping to borrow up to 80% loan to value. The property required some minor upgrading and had undergone some historic alterations which did not meet current building regulations.

From a buy to let mortgage perspective, the applicant’s young age and lack of experience limited the borrowing options available, as did the property’s condition and the auction timescale of just four weeks to complete.

Fortunately I found a mainstream buy to let mortgage lender that could help and because we have a very strong relationship with them, they agreed to prioritise the case. This meant that the client avoided the expense of going down the bridging route.

Before agreeing to the finance the lender’s valuer inspected the property and concluded that it was in a good enough condition to let without the suggested minor upgrade work. The client’s solicitor - also acting for the lender - was also able to confirm the property as suitable security.

Once agreed, the lender provided 80% of the property’s valuation and completed the case on-time, within the four week timescale. This, in itself was no mean feat, as the Christmas holidays severely curtailed the number of working days available to complete the application.

Here are the details of the deal:

Property value (auction guide price): £130,000

Property value (auction price paid): £145,000

Loan amount: £116,000

Loan to value: 80%

Rate: 3.99% fixed for 2 years

Term: 25 years interest only

Monthly mortgage payment: £386

Monthly rental income: £700

Annual yield: 5.8%

Lender arrangement fee: 1.5% of the loan amount

Completion date: December 2014

This is just one example of how I've helped a client secure a buy to let mortgage. To see more of my case studies please visit my profile page. And if you have any funding requirements, please do not hesitate to contact me. My direct line and email address can be found below.

28th February 2015