I have five flats in a residential development and I want to re-mortgage?

Q: I have five flats in a residential development. The five flats generate rental income approx £105,000 per annum. With no agent fees. The value is £2,300,000 We have a interest only mortgage of £1,060’000 tracker at 1.8% above libor. We also have a house

A:

As for your let properties mortgages with lender, 1.80% over LIBOR is a very good rate, so unless you wanted to raise funds on those flats, it’s best to leave them there. Lending margins on rental property are now running over 3% above cost of funding. It would also be difficult to raise funds here, because your rental income would restrict any more lending. The 1.06M at a stress-tested rate of 6% would cost 63k per year, and so the rental income of 105k doesn’t allow for much more lending. As for your main residence, it’s possible to improve the rate that lender would offer, because you have a good equity position where the loan to value ratio is 60%. We’d need to show the lender that you can easily afford the payments as rates inevitably increase. Generally, banks will lend 1.5m on your home if we can prove income of approximately £350k to £400k. The numbers you supplied for income from location shoots, holiday rental and your self-employment total about £230,000 – so I’d like to see if there is any other income, assets or investment income that we could use to show the bank that you can afford the mortgage. An income of £230,000 would mean that the mortgage is over 6 times your gross income and 11 times your net income, which wouldn’t be considered affordable.

These questions are for information purposes only and do not contain all the details you need to choose a mortgage, ask one of our advisers for a personalised key facts illustration

Return to the Questions archive

Our insights


We are the UK’s leading specialist in delivering innovative and bespoke financing solutions to global clients.

Reviews


Specialists in creating innovative and bespoke funding solutions.

Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Changes in the exchange rate may increase the sterling equivalent of your debt. You may have to pay an early repayment charge to your existing lender if you remortgage. Think carefully before securing any other debts against your home.  

largemortgageloans.com is a trading name of Largemortgageloans.com Ltd, Aegon House, Ground Floor Suite, 13 Lanark Square, London, E14 9QD authorised and regulated by the Financial Conduct Authority (FCA). Our FCA registration number is 302228 and can be viewed by visiting the FCA website: www.fca.org.uk.  The FCA does not regulate tax advice or some aspects of commercial, buy to let, overseas mortgages, bridging finance, finance and asset lending.  

Largemortgageloans.com Limited is registered with the Guernsey Financial Services Commission, reference number: 2269418, as a Non-Regulated Financial Services Business.  

Largemortgageloans.com Ltd Registered in England and Wales No: 5070990 Registered Address: As above. The guidance and advice contained within the website are subject to the UK regulatory regime and is primarily targeted at UK customers. Calls may be recorded for training and monitoring.