The clients are a married couple with a portfolio of more than 10 properties. They approached us for help in financing the purchase of a purpose-built 2-bed flat in Manchester. The flat was in need of refurbishment before it could be let. This ruled out most buy to let lenders who insist that properties are in a lettable condition in order to qualify for a mortgage.
The couple didn’t want to use a bridging loan because not only is short term finance expensive, but also they would incur additional costs refinancing once the work was finished.
Instead we sourced a light refurbishment buy to let mortgage which is more cost-effective. It allowed the couple to buy the flat, carry out the refurbishment and then draw down further funds once the flat was ready to let.
Here are the details of the deal.
Property price: £120,000
Property value post works: £135,000
Loan amount: £101,250 (£90,000 initial loan with a retention of £11,250 to be released after works are completed).
Loan to value: 75% (of post-work value)
Rate: 2 year tracker lender’s LIBOR + 4.65% = 5.25%
Term: 25 years interest only
Monthly mortgage payment: £443
Monthly rental income: £550
Annual yield: 3.9%
Lender arrangement fee: 2% of the loan amount added to the loan
Completion date: December 2014
This is just one example of how we have helped a client secure a buy to let mortgage. To see more of our case studies please visit either Andy's or Gavins's profile page. And if you have any funding requirements, please do not hesitate to contact us. Our direct lines and email addresses can be found below.