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The client was looking to become a Buy to Let landlord for the first time. However, due to the property having a protected tenancy and the fact that he was not deemed to be an experienced landlord, finding a mortgage was difficult.
Our client wanted to purchase an investment property through a UK Limited company structure or SPV (Special Purpose Vehicle) at 75% of the purchase price.
The property was a freehold made up of 12 self-contained apartments. Most were rented out to students; however, one apartment was rented out on a protected tenancy.
As a result the amount of rent the landlord can legally charge was restricted. This was problematic as most of the lenders we initially approached would not consider offering a mortgage against a property with a unit of this type.
In addition, the case was complicated by the fact the client did not currently own any other Buy to Let properties, and was not, therefore, considered an experienced landlord. This was also of concern to most lenders, due to the type of multi-unit property he was interested in purchasing.
Using our extensive range of private bank contacts, we were able to find a lender who was willing to take a view on the client’s lack of experience as a landlord.
The lender was happy to offer a loan based on 75% of the property purchase price, minus the estimated value of the flat which was rented out on the protected tenancy agreement.
The client was happy with our solution and was able to make their first large Buy to Let acquisition.
|Loan amount:||£ 958,500|
|Rate:||4.05% margin over 3 month LIBOR, subject to minimum rate of 0.75%, to give a current interest rate of 4.80%|
|APR:||Overall cost for comparison 6.18% APR representative variable|
|Lender’s arrangement fee:||1.7% of the loan amount|
|Early repayment charges:||3% of the loan amount in the 3 year term|
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.
Please note that this specific deal may not be available to – or suitable for – all customers, dependent on 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 The rate quoted may become out of date at short notice and may not be available at the point at which customers enquire about it.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 document may not contain all the information needed for customers to make a decision and they should seek advice.
Overall cost for comparison 6.18% APR representative variable based on 3 years at 4.80%. Lender’s arrangement fee of 1.7% of the loan amount. The actual rate available will depend on your circumstances. Ask for a personalised illustration.
largemortgageloans.com is a trading name of largemortgageloans.com Ltd, which is authorised and regulated by the Financial Conduct Authority (FCA).The FCA does not regulate some aspects of Buy to Let mortgages, overseas mortgages, commercial mortgages, business finance and tax advice. A fee of up to 1.17% of the mortgage amount is payable, of this 25% is payable on application and the remainder on completion, e.g. on a mortgage of £1,000,000 the fee would be £11,700 of which £2,925 would be payable on application. The precise amount will depend on your circumstances.
Your home or property may be repossessed if you do not keep up the repayments on your mortgage.