The client, a fulltime property developer and landlord, approached us for help in purchasing a two-bed terrace house in need of complete refurbishment before it could be let out.
The Application Process
As the vendor required a quick sale and the property was in a poor state it could not be purchased with a buy to let mortgage, so it was clear that a bridging loan was initially required.
We approached a lender which offered to provide a bridging loan first, then without the need for an additional application, would allow the client to remortgage onto a buy to let mortgage product (subject to a simple re-inspection) once the property was ready to let.
Crucially, the lender agreed to allow the refinance to take place within six months of purchase – not many lenders will allow this type of transaction.
See the finance details below:
Bridging Loan
Purchase price: £200,000
Loan amount: £150,000
LTV: 75%
Rate: 1.04% pcm interest only
Term: 2 months
Lender arrangement fee: 2% (£3,000)
Buy To Let Mortgage
Property value post works (Gross Development Value): £235,000
Loan amount: £175,000
LTV: 75%
Rate: 4.68% 2 year fixed rate
Term: 25 years interest only
Lender arrangement fee: 2% (£3,500)
Mortgage payment: £585
Rental income: £950 pcm
Gross yield: 4.85% pa
Have a similar case?
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