Refinance of refurbished ex-LA flat within 6 months of purchase

The client is an experienced, full-time property investor who owns eight rental properties. He approached me for help in refinancing a South London flat he had just finished refurbishing. The flat had been purchased with a bridging loan and the investor’s original intention had been to sell the flat once the refurbishment was complete. However, when the anticipated sale price was not achieved, he decided to rent it out, so need a buy to let mortgage to pay off the bridging loan.

This was a challenge because most lenders will not allow refinancing within 6 months of purchase. An added complication to this was the fact that the flat was ex-Local Authority, in a 5-storey block with balcony access, which again, limited the choice of lenders.

We approached one of the new peer-to-peer lenders that was happy to consider the application. Because the investor was experienced and the flat was expected to generate a healthy rental income, the lender was happy to assist with a loan that not only paid off the bridging finance but also provided an extra £30k to put towards another refurbishment project.

Here are the details of the deal:

Property value: £360,000

Loan amount: £252,000

Loan to value: 70%

Rate: 4.5% (Bank Rate 0.5% + 4%)

Term: 5 years interest only

Monthly payment: £945

Month rental income: £1,750

Annual yield: 5.8%

Lender arrangement fee: 2%

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.

6th January 2015