5-year fixed rate for property developer & portfolio landlord

THE SCENARIO

I was recently personally recommended a client with whom I had worked with before. My client is a property developer and portfolio landlord who liked his current development project so much, he wanted to add it to his small buy to let portfolio within his limited company.

My client’s original plan for this property was to purchase, carry out a full refurbishment, and then sell on after completion. However, after the refurbishment was finished, my client was so happy with the result that he was determined to add it to his buy to let portfolio. The property in question was a one bedroom flat in North West London, which my client had previously taken out a bridging loan to purchase.

The main obstacle with this case was caused by my client having let the property to a council tenant. He was also looking to remortgage and capital raise in order to exit the bridging loan taken against the property, and have some funds left over. A final complication was that my client required a payrate product, as the rental income on the property was not enough to meet the lender’s rental stress criteria.

OUR SOLUTION

Due to my market knowledge, I was able to find a lender who was very familiar with the concept of developers refurbishing and retaining properties. Further to this, this lender was also open to accepting council tenants, which is typically a very hard issue to overcome.

The lender was also able to capital raise on the bridge, meaning that my client could remortgage on the completed property to exit the short-term loan, and have excess remaining capital to use for other purposes. The property was also owned in a limited company name rather than my client’s personal name, and the lender had no problem in structuring the loan for the company.

I managed to achieve a fantastic 5-year fixed rate for my happy client at 3.65% on an interest only basis at 75% loan to value.

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