Background

The client was looking to buy a detached bungalow for him and his family to live in, the property had been derelict for 7 years and required substantial refurbishment for £575,000. The client was referred to us by one of our estate agencies partners, and he is qualified as a mortgage broker himself but had not been advising for quite some time. The client was so impressed with our analytical way of advising, many other specialist brokers get complacent with the lenders they use but ultimately while being the path of least resistance is not always the best outcome for the client.

The client is a professional landlord managing his own portfolio plus other landlords’ properties as well and this was his only source of income.

We were required to raise the capital for the deposit of the property but also enough funds to be able to renovate the property as well. The total raise required from existing properties was £425,000 plus £100,000 that the client had already raised previous and was holding cash.

Challenges

Having reviewed the portfolio with the client we discussed various current values and outstanding balances and identified which properties best in the position to raise capital from this meant we needed to remortgage 4 separate properties to achieve the required funds plus the purchase mortgage for the main property.

As the client had a large portfolio of mortgaged properties this meant we needed to look at lenders that would consider this as many vanilla buy to let lenders will cap landlord portfolio lending to 10 properties.

We also needed to raise as much as possible so most of the remortgages we required to go to 80% loan to value.

Further to this with so many remortgages involved we wanted to try and mitigate risk and cost so ideally, we wanted to see if we could achieve free valuations on some of the applications.

There was significant work required to the roof of the property and it was a concern that this would potentially require a retention of funds.

Solution

We placed four remortgages with a total value of £1,105,000, enough to pay off the outstanding mortgages and capital raise the required funds. Three of them up to 80% loan to value and one at 75% loan to value, one of them being a HMO and three being single buy to lets, we managed to get free valuations on three of the mortgages which meant the up front risk to the client was minimal. We managed all these four remortgage applications simultaneously with each other. We prepared all the documentation including a full portfolio breakdown, business plan and assets and liabilities forms quickly and efficiently to the lenders, we managed to get all funds agreed within 4 weeks.

We then processed a £300,000 loan for the purchase of the property, we also managed to get this agreed on a interest only basis up to the clients 80th birthday which helped his cashflow using his portfolio as the repayment strategy.

When the valuation was finished there was a problem, the property was down valued significantly to £400,000, this was due to lack of comparable evidence in the area, but the property was truly unique, and the current condition did not help either. A retention of £100,000 was placed on the loan as well.

We worked with the client and estate agents and successfully negotiated a £125,000 reduction in the purchase price, we also got the retention removed which then allowed the client to proceed.

Results

• Client got the funds they needed to be able to purchase and renovate property.
• Achieved the most efficient use of the current equity in the portfolio.
• Kept costs low by arranging the residential mortgage on an interest only basis which was ideal for this client’s circumstances.