Categories: Case study | limited company

The client in this case is an experienced property investor with a large portfolio. We had already helped the client secure a bridging loan to refurbish a property they had bought. The next step was to pay back the bridging loan with a limited company buy to let mortgage.

The client wanted to move at pace, they had only owned the property for three months before wanting to refinance to a mortgage. We were able to get a lender in place quickly who offered flexible criteria and generous affordability to help maximise the amount we could raise.

The case

Investment route: This investment was made via a Special Purpose Vehicle (SPV) limited company

The existing portfolio: The client had a large portfolio of properties

The property: The security property was a terraced house which had become outdated, the bridging loan had been used to buy it, with the client using their own funds to renovate the property. Once the property was refurbished to a standard the client could achieve a competitive rent, he remortgaged and paid back the bridging loan.

The tenancy arrangement: Standard Assured Shorthold Tenancy Agreement (AST)

The borrowing requirement

The client wanted to release funds as quickly as possible to pursue other property investment projects. They wanted to raise as much equity out of the property as possible, without sacrificing on rate – monthly payments needed to be competitive.

The challenges we overcame

Given the client had owned the property for three months, we had to look at lenders who offer ‘same day’ remortgage options. Some lenders will want to see a property has been owned for six months.

In addition, we had to find a lender who would consider a new market value for the property, as the client had added considerable equity with the works done. Not all lenders are comfortable giving a mortgage with significant increase in value within 6 months.

With a large portfolio in the background, lenders are conscious of ‘exposure’ – this can be the number of properties the lender has secured for the client, or it can be the number of properties the client has in their portfolio overall.

Lenders can also be cautious of rapid expansion of a portfolio, and with this client the growth in the portfolio was significant over a relatively short time frame.

As the client wanted to move quickly, we also took into consideration lender service levels, to ensure we worked with one who could issue funds to the client as quickly as possible. We expect funds to be issued in 6-8 weeks.

The solution

Property value: £140,000

Capital raised: £33,000

Loan to value: 75%

Rate: 5.94% five year fixed

Term: 30 years

Payment basis: Interest only

Monthly mortgage payment: £520

Monthly rental income: £825

Lender arrangement fee: Nil

Gross yield (before costs): 7.07%

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