Discover how MFB successfully secured a capital raise for our foreign national client against an unencumbered London high-rise flat despite initial challenges with cladding and high service charges.
At a glance:
- Foreign national landlord with one unencumbered buy to let
- An unlet flat in a 14-storey high-rise block in central London
- Cladding and service charges made finding a suitable lender challenging
The Case:
Our client was a foreign national with full rights to remain in the U.K. With one unencumbered buy to let, our client approached us looking to capital raise against their current property to fund a new investment.
The property was a single-let flat in a high-rise block in London. At the time of the initial enquiry, there was no tenant in the property, which meant the lender’s valuation would need to provide an estimated market value rent.
The Challenge:
Shortly after the valuation, our client found a tenant, which helped move the application along. The main challenges with this case were due to the property itself.
Not all lenders accept flats in high-rise blocks, and the appetite for the number of storeys accepted varies. In this case, the lender we approached had no issues with the 14-storey building but had reservations due to the property's cladding.
Despite the government-funded work to remove the cladding from the building, this project was expected to take at least a year to complete. Furthermore, our client didn’t have an EWS1 form, which all lenders typically require with cladding applications, and there was a considerable service charge on the property which further complicated the case.
We approached a specialist lender we knew would be open to considering complex high-rise property cases. Given the ongoing work on the building, our lender was happy to proceed without an EWS1 form, as there was a clear plan for removing the cladding. Furthermore, the lender accepted the high service charge, as we worked closely with the underwriters to prove it didn’t exceed 1.12% of the overall property value.
Moreover, our lender was happy to release the funds for a new deposit despite our client being yet to find the right investment property. With all queries responded to, the underwriting on this case was very quick, with an offer issued in just three weeks and a completion just four weeks from the mortgage application submission.
The Finance:
Property value: £400,000
Loan amount: £238,000
LTV: 60%
Rate: 5.69% 2-year fixed*
Term: 25 years, interest-only
Monthly mortgage payment: £1,136
Lender arrangement fee: 2% (£4,760)
*Rate as at May 2024
Next steps
Find your next buy to let mortgage
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