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Portfolio landlords borrow 6 times joint income on interest-only terms to remortgage £2m home

Portfolio landlords borrow 6 times joint income on interest-only terms to remortgage £2m home

02.01.18 | Written by: Pete Coombes

A married couple approached us looking to refinance their home to repay a bridging loan and raise capital for property investment. Both husband and wife are full-time landlords with a portfolio of more than 40 properties.

The property in question is a five-bed detached home in South West London, where the family have been living for the last three years.

After speaking with their high street bank and a local broker, the couple were concerned that they would be unable to borrow the amount the required in the time scale required. A friend had suggested that they approach us for help.

There were five main challenges with this case:

  1. The couple’s income is derived solely from rent – not all residential mortgage lenders will accept full-time landlords

  2. With more than 40 properties in their portfolio, we need to find a lender which does not limit the number of properties owned/mortgaged

  3. The couple wanted to borrow six times their joint income – almost unheard of within the residential market

  4. To maximise their borrowing, the couple wanted interest only terms - not widely available on home-owner mortgages

  5. Because the bridging loan was nearing its term, the couple needed the deal to complete within three months. Although normally not an issue, the Christmas break can lead to delays with some lenders

At present, there is only one lender which will allow applicants to borrow up to six times their income, so we knew who to approach straight away. Further, these particular mortgages are extremely limited and can only be accessed by Mortgages for Business and a few other brokers.

As time was of the essence we needed to submit the application as quickly as possible. We worked with the couple to collate the documentation required including a property portfolio spreadsheet, application form and evidence of income.

Within three weeks of submission we received a formal mortgage offer and the case is due to complete mid-January, well within the couple’s deadline.

Here are the details of the deal:

 

Property value: £2,000,000      

Loan amount: £614,000

LTV: 31%

Rate: 3.15% 5 year fixed LIMITED EDITION PRODUCT

Term: 25 years interest only

Mortgage payment:  £1,614.44 pcm

Previous monthly payment: £4,017 pcm

Lender arrangement fee: £999 (added to loan)

Consultant: Pete Coombes, 01732 471268

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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