Remortgage of unencumbered property to raise capital

THE SCENARIO

We pride ourselves on succeeding where other brokers have failed. A recent client of mine was let down by two other brokers before approaching Enness, but fortunately, I found a solution for her admittedly very complicated case.

My client was looking to remortgage an unencumbered property to raise capital for the purchase of a residential property in the Republic of Ireland.

My client was an entrepreneur in property rental and holiday lets. She was in her forties, but she owned the property in question with her 80-year old mother. Her mother’s age was therefore an issue, as most lenders have a maximum age cap. Sadly, her mother was also blind and suffered from dementia, which posed a legal issue. However, this was not the main problem; I felt confident lenders would accept the daughter was the main applicant, as her mother was not involved in the day to day running of the security.

The bigger issue was the nature of the property that would be used to raise the capital. The property consisted of eight self-contained one-bed units, held under a freehold title. Seven of the eight flats were studio flats, which were smaller than most lenders minimum size requirement.

As an additional complication, although the property was in the South of London, the money was going to be used to purchase a property outside of the UK.

OUR SOLUTION

I knew I would need to present this case carefully to prospective lenders. As mentioned, I explained to lenders about the mother’s limited involvement, so this was not an ongoing issue. I then gave the lender an overview of the property’s location and presented its overall value, as opposed to the value of the individual units. Due to its location, the property offered strong rental income, again reassuring the lender of its value.

This lender is a boutique private bank with whom I have a close working relationship. They were happy to proceed on the above basis, with one proviso; once the funds were released, the solicitor must confirm the funds would immediately be used to purchase the property in Ireland.

This was a suitable resolution, and the final rate secured was a 3.99% variable rate for five years. If you have a complex property finance issue, I would be very pleased to discuss this with you further.

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