Key figures:
- First flat valued at £1,252,500
- Second flat valued at £1,255,000
- 75% Loan to value
- 3.99% for 5-years fixed over 25 years
- No early repayment charges
The client:
My client is UK expat based in Hong Kong who holds a senior position at a large multi-national bank. He owns five buy-to-let properties in the UK. A long-standing client of Enness, he has utilised our service in the past to mortgage his entire portfolio.
The property:
Two flats in the same new build development, valued at £1,252,500 and £1,255,000. The flats are located in a desirable area of West London, in close proximity to Heathrow Airport.
What were they looking for?
My client had already raised funds from his existing portfolio which covered the down payments for the two new flats before the build was complete. He was then looking to secure a mortgage to cover the remaining amount of the purchase.
Why was it difficult?
Last year, changes were made to the legislation regarding how buy-to-let mortgages are underwritten. New Prudential Regulation Authority (PRA) rules mean that landlords with more than four properties to mortgage will face extra difficulty. The lender will look at a client’s background portfolio and make sure it meets the minimum rental calculation before agreeing to lend on said properties.
Unfortunately, my client was the owner of five properties and did not meet the minimum PRA rental calculation. Furthermore, as he was an ex-pat purchasing a new-build within a limited company’s name, this meant we faced increased difficulty.
What was the process?
It is very rare to find a lender who would not require the background portfolio to meet the minimum rental calculation. However, I have been working with a fairly new lender who is very relaxed when dealing with background portfolios. They are a Sharia-compliant lender and therefore do not have to follow PRA ruling, meaning that they were able to offer an outstanding 75% loan to value.
The solution:
On top of the excellent loan to value, we managed to negotiate a rate of 3.99% fixed for 5 years over a 25-year interest-only term for the two properties combined. This was also secured with no early repayment charges (ERCs) which was ideal for the client.
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