The client is a self-employed property developer who also owns one rental property which happens to be the flat above his own home. The client lives in the ground floor flat in a block of four in SW London.
He was looking to grow his buy to let portfolio so when another flat in the block went up for sale, he contacted us for help in purchasing it. Unfortunately many lenders can be very reluctant to lend to landlords who own more than one property in a block for a couple of reasons:
• Repossession is more complicated, time-consuming and costly
• If the majority of flats are on sale at the same time, this can negatively affect re-saleability and sale price
Fortunately, we have a strong relationship with a mainstream buy to let lender that will consider borrowers who own more than 25% of a block of flats. In this instance, because the property is in a strong London location (zone 2) and the client was borrowing a relatively small loan to value, the lender felt that the risk was worth it.
Here are the details of the deal:
Property value: £650,000
Loan amount: £337,500
Rate: 4.04% fixed for 5 years
Term: 15 years interest only
Monthly mortgage payment: £1,136
Monthly rental income: £2,000
Gross yield: 3.7% pa
Lender arrangement fee: £995
Completion date: January 2015
Consultant: Charlie London, 01732 471604