Chinese national & UK partner refinance partially vacant semi-commercial property

A broker approached us looking to arrange finance for two business partners looking to raise capital against one of their investment properties.

One of the business partners permanently resides in China is not in full-time employment. The other business partner lives in the UK working as a consultant in the medical industry.

The property in question is an unencumbered semi-commercial property on a high street in Kent. The top three floors comprise of a six-bed HMO – all rooms are currently let. The bottom floor is a vacant retail outlet.

The partners wanted to refinance the property to raise funds to purchase a further buy to let.

As the client’s originating broker only deals with vanilla buy to let and residential transactions, he approached us for help.

There were a few challenges with this case:

• One of the partners permanently resides in China
• The property is classed as semi-commercial
• 25% of the property is vacant (the commercial element)
• The property was originally purchased via funds from China

We took the case to a specialist lender which takes a manual approach to underwriting. In addition to the standard application form and proof of ID, we also had to provide the lender with proof of how the funds were obtained to purchase the property originally.

As one of the applicants only had a small grasp of the English language we helped the client to find a suitable translator, which helped speed up the process.

Happy that the income received on the HMO was more than sufficient to cover the debt servicing costs, even with the vacant facility on the ground floor, the following terms were offered:

Property Details

Property value: £610,000

Loan amount: £325,000

LTV: 54%

Rate: 6.89% term tracker

Term: 5 years interest only

Lender arrangement fee: £4,875

Borrower: Partnership application

Mortgage payment: £1,866 pcm

Rental income: £2,800 pcm (£1,250pcm extra rent for commercial unit once let)

Gross yield: 5.5% pa (8% when retail unit is let)

Broker proc fee: £2,500

Consultant: Paul Keddy, 01732 471655    

23rd August 2017