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Portfolio Expansion

A case study about a property portfolio expansion

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Finance terms

All three properties were mortgaged with a high street lender, who were unwilling to offer the client additional borrowing. The client needed more funds to purchase a further investment property, which would increase monthly income.

As well as the client wanting to raise extra money on the properties it also gave them the opportunity to look for a better rate. The client was looking to borrow the money on a capital repayment basis and was keen to keep monthly repayments under £3,000 per month.

The total rental income received from the investment properties was £3,341.67 per month.

  • Loan Amount – £530,000
  • Combined Valuation – £910,000
  • Rate – 2.85% above base rate
  • Monthly Payment – £2,772
  • Repayment Method – Repayment
  • Lender Arrangement Fee – 0.75%

Solution

This application presented a challenge as the client was keen to group the properties together under one application. This was tricky as two of the properties were commercial investments, with the other being owner-occupied.

Each of the properties had previously been occupied by the borrower. They had built up the trade in each property, before letting it at a premium rent, based on the strong trade, which was immediately available. This excluded a lot of lenders from the market, as they weren’t comfortable with the mixture of owner-occupied and investment properties on one application.

We were able to secure funding for the applicant on the below terms using a blend of rental income and the net profit of the owner-occupied restaurant.

The loan was funded through a highly-regarded challenger bank at a very low rate, which represented a significant saving for the client.