60 days to completion on refinance of 2 large mixed use properties
The clients: A married couple – both experienced, full-time landlords and both in their 60s.
The properties: With the help of a mortgage facility, the couple own personally two large, Georgian properties on the same street in a busy Welsh town. One property has 16 units made up of a mixture of flats and a 6-bed HMO. The other has 13 1-bed flats and a 5-bed HMO on the upper floors and an office at street level. Both properties are in an excellent condition and fit for purpose.
The finance: The mortgages on both properties were two months’ short of the end of their respective terms but because of the couple’s ages, their lender would not offer them a new loan facility. Worried that they would have to pay a considerable penalty if they couldn’t secure alternative finance quickly, they approached Mortgages for Business for help.
As well as raising £850k to pay off the existing loan, they asked if it would also be possible to raise an additional £50k to use as a deposit to purchase a further rental property.
This couples complex circumstances meant funding would need to come from a specialist lender:
- Many lenders have an age restriction of 75 years at maturity of the loan. To afford the repayments, our couple needed a loan term of 20 years which would take them into their 80s.
- Some lenders will only loan to UK citizens. The wife is a foreign national although she does have a permanent right to reside here.
- No all lenders allow tenants in receipt of state social security benefits. 30% of the occupants receive benefits in one form or another.
- Some lenders steer clear of full-time landlords, preferring borrowers to have income in addition to rent.
- Lots of lenders use credit scoring to help assess applications. Our couple have a low credit score so we needed to use a lender which assesses credit profile in the round rather than relying on a score.
- Both properties are on the same street. Many lenders avoid lending to borrowers looking for finance on properties in close proximity to each other.
The application process: With time of the essence we scheduled a call with the couple to discuss the best way to proceed.
From experience, we knew that splitting the deal into two smaller amounts would help to get the finance in place in a shorter time period. They agreed to this approach and so we then helped them to complete the application form and collate the supporting documents, which included a detailed schedule of their entire portfolio and outstanding loans, a statement of income and expenditure, tax returns and proof of identity and address.
At the same time, opened negotiations with a new specialist property lender which currently only operates via a select panel of brokers – including Mortgages for Business of course! This lender accepts:
- Older landlords
- Foreign nationals
- DSS tenants
- Full-time landlords
- Properties in close proximity to one another
This particular lender also takes a common sense approach to underwriting, and was happy to sit down and discuss the minor credit issues – which had already been resolved.
As expected the lender was more than happy with the couple’s income, the location of the properties and how they are managed. An offer was receive within one month and the funds are due to be transferred to the couple shortly.