March 12, 2018
Loan: Complex BTL
Rate Offered: 4.88% Fixed for 5 Years, 10-year term on Interest Only (reversion rate after 5 years 3.84%+ LIBOR)
Monthly Repayment Cost: £2,384.31pcm
Completion: 12-week turnaround
Our clients, a team of three trading as a Ltd Company, had purchased an old Police Station. They had taken out £900,000 development finance with NatWest to convert the station into a freehold block of four flats. Once the conversion works were completed, they intended to clear their development finance with Natwest and raise further funds against the new value of the block of flats, for an onward development project.
With estimated rental income from the four flats and the £900,000 property value, our clients approached the major High Street lenders to raise £580,500 - but they would not consider lending to them. Their situation was considered a complex Buy-to-Let mortgage application, because they were a development company and the property was a freehold block of multiple flats.
Another issue surfaced when the property was surveyed and the estimated rental income was less than expected, which meant any lender would decrease the amount in which they could lend to our clients. However, our client desperately wanted to keep hold and rent out the flats due to the capital growth potential in that area.
Dealing with complex BTL situations on a daily basis, when the clients approached us, we assessed their application and took on the case straight away.
As the clients had high outside personal incomes, we spoke to the lender to see if they could agree an increase in lending of 10% on an exception basis.
This was agreed, and the loan amount we were able to approve for our client was £580,500. As our client had paid off £750,000 of their Natwest finance during the application process from sales of other property, they needed £150,000 to close off their debt, and planned to use the remaining £430,500 for their next project.
The application was sent to the lender and the Decision in Principle was received same day. Completion was achieved in a 12-week turnaround time.