This case study demonstrates how we arranged a £2.7million BTL remortgage at 3.8% variable interest rate with rental cover required of just 115%. To discuss this or any other large mortgage case, please contact us.
The client was a senior executive at a multinational company. He had a £2.35million loan on a property worth £4.5million, which, due to his development work, had appreciated significantly from its 2009 purchase price of £2.5million. His was borrowing at Base Rate + 5% from development funders who wanted their money back. He wanted to repay his funders, reduce his borrowing rate and raise £350,000 for his next project. He had been living in the property in question but wanted to let it out at a rental cost of £3,000 per week (a yield of 3.5%).
1. The client had been living in the property, not letting it out, so there was no track record of rental payments.
2. The yield of 3.5% was too low for traditional Buy to Let lenders.
3. The client’s income, although in six figures, was insufficient to cover the proposed debt of £2.7million.
The client’s broker had limited experience in arranging such a large and complex loan, so referred his client to largemortgageloans.com’s specialist mortgage brokers who know the small number of private banks who would be interested in the case. The clients were flying out to Bali, so the largemortgageloans.com broker went to meet them face to face to start the process immediately. A bank was quickly found willing to offer a loan, based on 115% rental cover, at Libor+2.95% (a pay rate of 3.8%) on a ten year term, interest only. There were early repayment charges of 1% for 2 years and the arrangement fee was 1.25%.
|£2.7 million (£2.35million replacement, plus £350,000 capital raising)
|Variable of Libor+2.95%¹ (pay rate of 3.8%)
|4.1%² (the overall cost for comparison)
|1.25% of the loan amount
|Early repayment charges:
|1% for 2 years
Note that this case study is for information and illustration purposes only. It is not an offer, or suggestion of an offer. Each mortgage case is assessed on an individual basis and there is no guarantee that the solution described here can be repeated in the future.
This case study shows that it is more important than ever to use the services of a specialist large mortgage loan broker who has access to the wide range of lenders willing to finance high value UK property, someone who searches the entire market to find the mortgage that fits your personal requirements.
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¹ Please note that this deal may not be available to – or suitable for – all customers, dependent upon their individual circumstances. The rate quoted may become out of date at short notice and may not be available at the point at which customers enquire about it. This letter may not contain all the information needed for customers to make a decision and they should seek advice.
² APR calculation based on arrangement fees of £33,750 and legal and valuation fees of £5,000. The actual rate available will depend upon your circumstances. Ask for a personalised illustration.
largemortgageloans.com is a trading name of largemortgageloans.com Ltd, 12 Pepper Street, London, E14 9QY which is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate some aspects of buy to let mortgages, overseas mortgages and tax advice. largemortgageloans.com Ltd Registered in England and Wales No: 5070990 Registered Address: Bridge House, London Bridge, London, SE1 9QR. Your initial consultation is obligation free. A fee as described below will be charged on application for a mortgage, this fee is non-refundable. We will also be paid by the lender. On mortgages up to £500,000 the fee would be £495. On mortgages over £500,000 up to £1,000,000 the fee would be £995. For mortgages over £1,000,000 and exclusive or semi exclusive schemes the fee would be up to 1% of the loan amount. e.g. on a mortgage of £2,000,000 the fee would be up to £20,000.