Capital raising loan on buy to let property to expand portfolio

THE SCENARIO

This month, I was contacted by a returning client who owns a buy to let property with a pre-existing mortgage. He wanted to raise as much capital as possible on the property, to allow him to put down a deposit on a second buy to let purchase.

My client was struggling to get the amount he needed when he approached me. This is something we see a lot of at Enness, especially for properties in Greater London, where rental yields are traditionally poor set against the relatively high value of the property.

As you can imagine, with the nature of this loan, there is much criteria a client must fulfil to qualify. Nearly all buy to let lenders have a minimum income criteria, and require evidence of owner occupier status. Furthermore, lenders typically like to see a strong rental income to determine the client’s affordability. A challenge was presented in relation to this as my client’s income was low, he was still living with his parents and his rental income did not support the level of borrowing he needed for his deposit of the second buy to let purchase.

To overcome these challenges, I approached a specialist buy to let lender who understands that due to the nature of London property, although rental yields may be low, it is generally deemed a very safe asset to secure debt against. Due to my influence and strong relationship with this niche lender, there was no problem with income as with some other lenders, and so I was able to secure a very reasonable rate for my client.

The lender offered a 2 year fixed rate at 3.89%, providing my client with the high loan to value (LTV) he wanted, and the extra income he needed to purchase his second buy to let property.

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