Large loan for landlords with no previous commercial experience

We were approached by a broker whose clients were looking to purchase a large semi-commercial property via a newly established SPV limited company with the assistance of a large loan facility.

The building is located in a busy town next to a free car park. On the ground floor the building has a large shop with office, storeroom, kitchen and toilet let out on a long lease.

Above are four well maintained flats with their own parking and bike shed storage. All of the flats are let out on ASTs some to tenants in receipt of housing benefit.

Both of the directors are self-employed builders and part-time residential landlords with provable, independent income outside of rents.

The directors have been landlords for just a couple of years and own rental properties (HMOs & multi-units) in their personal names; however, neither own their own home nor have they any commercial property investment experience.

Clearly this was a complex scenario, so we approached a challenger bank which takes a bespoke approach.

After considerable negotiation we were able to obtain the following terms which were acceptable to the clients. The loan application was completed within eight weeks.

Property value: £770,000

Loan amount: £501,000

LTV: 65%

Borrower: SPV Ltd Co

Rate: 5.09% variable

Term: 10 years part interest & part repayment

Lender arrangement fee: 2% (£10,020)

Mortgage payment: £2,825 pcm

Rental income: £4,525 pcm

Gross yield: 7.1% pa

Consultant: Peter Barnes, 01732 471641

24th May 2016