Remortgaging Buy to Let Property

THE SCENARIO

Remortgaging buy to let property to raise funds is something we’re frequently asked to help with. I was approached by a barrister and his wife who were looking to purchase a new main residence worth £900,000. However, to do this my clients needed to raise capital through the mortgage of a buy to let property they owned in Kensington. The investment property was valued at £1.4 million and there was an existing £500,000 mortgage. As many of our clients often own more than one property in London we find the remortgaging of buy to let property to raise equity to be a relatively common solution.

My client had recently become a QC which had resulted in a short-term reduction in his income. In addition, the rental yield for the investment property did not satisfy many lenders’ requirements for the large mortgage my clients were looking for.

Although my clients had not yet found a new main residence they were keen to start the process – remortgaging buy to let property – in order to make sure that they had their deposit readily available.

Although the rental yield was not spectacular, the fact that these were high net worth clients and it was a prime central London property enabled me to negotiate terms with a leading bank. Instead of applying their normal formula for buy to let lending, thanks to the relationship with Enness Private Clients, I was able to secure a loan of £750,000 based on a reduced rental coverage for the remortgage of investment property.

With regard to my client’s income, the fact that he had become a QC meant that his future potential earnings would increase – even though they had fallen temporarily. I was able to confirm this by securing a projection of future earnings from my client’s accountant.

OUR SOLUTION

As this was a high net worth client remortgaging buy to let property that was considered prime, the lender was happy to agree a £750,000 loan on a fixed rate of 3.19 per cent to June 2015. My client was able to raise an additional £250,000 which they will use as the deposit for their new main residence once they have found their ideal property.

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