Commercial Owner Occupier Purchase with Large Residential Element
The Client: an established trading company of over 13 years, our client imported and refurbished musical instruments, ready to resell via their showroom and online.
The Property: the land the client wished to purchase included a four-bedroom house and outbuildings including a detached office, barn and garage with additional outdoor parking.
The Finance: the client was looking to purchase the property in the company name to avoid a regulated mortgage contract. He intended to live in the four-bedroomed house with his family as their primary residence, and then use the outbuildings to run the business, including a showroom, workshop and storage for the imported instruments.
The Challenge: the house formed over 40% of the overall property, meaning that most commercial lenders would consider it a regulated transaction. Unfortunately, the client’s provable income would not support a standard residential mortgage for the property, and the company accounts, as they were, wouldn’t support a commercial mortgage either. Not only did we have to find a way of showing that the client and the company could afford a mortgage on the property, we had to look into the client’s current trade assessment and projections. We also had to find a lender who would be happy to treat the case as an un-regulated transaction and complete the complex underwriting required.
The Solution: Due to the complexity of the property and the case, this required a combined effort of our commercial and residential broker teams.
Our residential team set about arranging a let to buy mortgage for the client’s existing home, meaning we could raise a deposit of £600,000 towards the purchase.
Our commercial team worked with the client’s accountant to adjust the business’ projected profits. The company had been paying rent on their existing commercial premises and for additional storage space for the instruments. By taking into consideration the saving the company would make by the move, we were able to show lenders that the business would be profitable enough to support the mortgage.
Armed with this documentation, we were able to approach a lender that we believed would treat the case as an un-regulated mortgage and accept the application through the company name. Based on the healthy projected company profits from the accountant, the lender was happy to underwrite the deal and provide the funds our client needed to purchase his new home and business premises! Here are the details:
Property Details
Property value: £1,275,000
Loan amount: £750,030
LTV: 59%
Rate: 6.99%
Term: 20 years, interest-only
Mortgage payment: £4,496 per month
Application: Trading Limited Company
Consultant: Andy Elley, 01732 471644
25th February 2020
