My client is an experienced, self-employed landlord looking to expand his existing portfolio in his sole name by releasing equity in one of his rental properties.
The property he chose was a semi-detached house rented to a family on an AST at £628pcm. Valued at £140k, the property already had a mortgage on it of £91k (65% LTV) at a rate of 0.99%.
Understandably the client was reluctant to refinance away from this great rate, so we suggested a buy to let equity loan which would allow him to raise £28k (20% LTV) and take his total borrowing up to 85% LTV.
The new lender took a second charge to sit behind the existing mortgage. Crucially, with this type of borrowing there are no monthly repayments. Instead, the original loan amount is repaid along with a share of any increase in the value of the property during the life of the loan (subject to a minimum repayment of 2% per annum simple interest). This suited the client as it did not affect his cash flow.
Here are the details of the deal:
Property Value: £140,000
Rental income pcm: £628 pcm
Existing Mortgage: £91,000
Existing rate and term: Bank Rate + 0.99% (currently 1.49%) – 12 years remaining
Existing LTV: 65% LTV
Equity loan amount: 28,000
Equity loan rate: Nil pcm. 40% of any increase in the value of the property during the life of the loan
Term: 12 years to mirror his existing mortgage
Arrangement fee: Nil
Completion date: Est. October 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.