Our experienced landlord clients needed to remortgage a 13-bed HMO, complicated by a private investor charge. After challenges with previous brokers, they were referred to MFB for help. Our extensive experience and strong lender relationships secured them a competitive rate and a strong remortgage process.
At a glance:
- Experienced landlords with a portfolio of large HMOs
- A large 13-bed HMO purchased with private investor funding
- Our clients wanted to remortgage to raise capital
The Case:
The clients are experienced landlords with a portfolio of HMO properties. They approached us wanting to raise capital by remortgaging their large 13-bed HMO, which was made up of 2 units under one title: a 6-bedroom and 7-bedroom HMO.
Our clients initially purchased the property through their Limited Company with funding from a private investor. As a result, the private investor held a charge against the HMO.
Having tried other brokers already for this case, our clients had spent a fair amount on fees and were left feeling defeated. An existing MFB client referred them to us due to our experience working on complex buy to let applications.
The Challenge:
A number of factors threatened to deter lenders. Firstly, the client’s large portfolio of HMO properties meant many ‘vanilla’ lenders wouldn’t accept the case due to the client’s total borrowing across the portfolio.
Secondly, most lenders will not offer on cases where private investors have a charge against the property, adding another layer of complexity.
Lastly, we needed to consider the HMO's unusual structure of 2 units on 1 title. Lenders factor in the ‘resale-ability’ of a property when underwriting in the unfortunate event that they have to repossess it. In this case, selling two separate HMOs is much easier than one title with two units.
Despite these challenges, we knew it was essential that we secure our clients the best mortgage possible, especially given the difficulties they had already faced with other brokers.
Through our key relationships with leading specialist lenders, we worked directly with senior underwriters to discuss the case before submission. This meant we could mitigate any potential challenges during the application and reassure the lender in advance. As a result, we secured a competitive rate for our clients and supported them through to completion.
The Finance:
Property value: £765,000
Loan amount: £573,750
LTV: 75%
Rate: 6.84% 5-year fixed*
Term: 25 years, interest-only
Monthly mortgage payment: £3,368
Lender arrangement fee: 3% (£17,212)
*Rates as at February 2024
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