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Commercial mortgage to buy offices for property landlord’s other business

Commercial mortgage to buy offices for property landlord’s other business

10.04.18 | Written by: Gareth Richards

The client: A longstanding client of Mortgages for Business. He is a portfolio landlord who owns more than 100 investment properties. He is the director of several limited companies, both trading and SPVs, which provide him with multiple income streams. He had just set up another SPV when he approached us again for finance to make another acquisition.

The property:
A 2-storey commercial building in Buckinghamshire set up as an office. The client wanted to buy it using the newly established SPV then let it on a 5-year lease to one of his trading businesses.

The finance required:
The client was looking to borrow up to 70% LTV. Normally, this would be fine except, in this instance, the landlord and tenant are related which is not acceptable to a number of lenders.
We took the deal to one of the specialist property lenders which can only be accessed via a few intermediaries (including Mortgages for Business of course!). Having explained the scenario the Business Development Manager felt we stood a good chance of getting a lending agreement.

The application process:
We worked with the client to prepare and collate the documents and information that would support the application including:

  • A copy of the proposed lease agreement between SPV and trading company (and an overview explaining how it would work)
  • Detailed information about the tenant – successfully trading hotel-related business
  • 3 months’ bank statements for both our client personally and the tenant business
  • Details of the clients entire property portfolio
  • Proof of identity and address

To limit possible processing delays, we then liaised with the BDM to ensure that we had all the necessary paperwork before submitting the application. A formal mortgage offer was issued just one month later. Here are the details:

Property value: £395,000

Loan amount: £276,500

LTV: 70%

Rate: 3.75% term tracker

Term: 15 years capital & interest

Lender arrangement fee: 1.75% (£4,839)

Mortgage payment: £2,011 pcm

Rental income: £2,916 pcm

Gross yield: 8.9% pa

Consultant: Gareth Richards 01732 471627

 

ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

NB: ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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